Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

MANCHESTER SHIP CANAL BILL

As amended, to be considered upon Monday next.

PORT OF LONDON BILL

As amended, considered;to be read the Third time.

MANCHESTER CORPORATION BILL [Lords] (By Order)

Second Reading deferred till Tuesday next.

Oral Answers to Questions — TECHNICAL CO-OPERATION

Research Experts, West Africa

Mr. Tilney: asked the Secretary for Technical Co-operation whether, with a view to encouraging research experts to remain in and to be recruited for West Africa, a scheme of compensation for change of status for members of Her Majesty's Overseas Civil Service engaged interterritorially in research has been agreed with the Governments of Nigeria, Ghana, Sierra Leone and the Gambia.

The Secretary of Technical Co-operation (Mr. Dennis Vosper): An officer of my Department is at present in West Africa for discussions with the Governments there on such a scheme. I will keep the hon. Member in touch with the progress of the discussions.

Mr. Tilney: Will my right hon. Friend bear in mind that the equivalent scientific personnel in East Africa, who appeared in the pipeline much later than the scientists in West Africa, have already had their compensation agreed? Would he not agree that this delay is

very detrimental both to recruiting and to morale?

Mr. Vosper: Yes. I have that very much in mind. We are negotiating here with at least four Governments. That has accounted for the rather longer delay than I should like in bringing these discussions to a head.

Overseas Teachers

Mr. G. M. Thomson: asked the Secretary for Technical Co-operation why preference is given to male candidates for the thirty overseas teachers of English as a second language, appointed by the United Kingdom in accordance with the commitment made at the Second Commonwealth Education Conference.

Mr. Vosper: Most of these posts are expected to be in Asia and Africa, and the officer appointed will usually be on secondment to overseas authorities who in the British Council's experience most commonly expect to receive men teacher trainers. There will, however, be some posts for which women officers would be appropriate and the British Council will keep this in mind.

Mr. Thomson: Would it not be better to approach this on the basis of finding the most suitably qualified teachers for these posts, irrespective of sex? Is it not very disturbing to find this kind of condition actually put in advertisement by the British Council?

Mr. Vosper: The hon. Member may have misinterpreted the advertisement. It did not use the word "preference". The British Council is dependent on overseas authorities for applications and in the past the applications have been in the main for men, but I agree with the hon. Member that there is room for women in this development.

United Nations Expanded Technical Assistance Programme and Special Fund

Mr. G. M. Thomson: asked the Secretary for Technical Co-operation what increase he proposes in Her Majesty's Government's contribution to the United Nations Expanded Technical Assistance Programme and Special Fund for 1962 as Great Britain's share of the $150 million target recommended by the General Assembly.

Mr. Vosper: The United Kingdom Government have pledged contributions of the sterling equivalent of 3 million dollars to the United Nations Expanded Programme and 5 million to the Special Fund for 1962. These contributions are on the same level as for 1960 and 1961.

Mr. Thomson: Is the right hon. Gentleman aware that that is an extremely disappointing reply? Is he aware that the General Assembly has recommended that there should be a steady, expanding rate of technical assistance, and that if Her Majesty's Government are to co-operate in that there ought to be a substantial increase this year in the amount?

Mr. Vosper: I should remind the hon. Member that we are still the largest contributor to voluntary programmes, apart from the United States of America. Our programmes for next year will be reviewed in the autumn and I will note what the hon. Member has said.

Service Overseas (Volunteers)

Mr. Gardner: asked the Secretary for Technical Co-operation what steps are being taken by Her Majesty's Government to encourage service overseas by volunteers, especially graduates and other young people.

Mr. Vosper: As a result of discussions with representatives of a large number of voluntary societies and other interested people a scheme has been worked out to co-ordinate and stimulate the recruitment of volunteers for overseas service. I am circulating in the OFFICIAL REPORT a statement which I have agreed with the societies concerned and for whose co-operation I am most grateful.
These steps to stimulate voluntary service are of course supplementary to the general recruitment activities of my Department, about which I am making a separate statement today.

Mr. Gardner: Although I welcome the statement which has just been made by my right hon. Friend, may I ask whether he would agree that the organisation which has had, and now is having, a spectacular success in sending boys and girls overseas from the schools and industry to give unpaid a year of their life overseas, is Voluntary Service Over

seas? Will he take into account the outstanding record of that organisation when deciding and apportioning the grant which eventually will be given to these societies? Can he say whether a grant similar in proportion to the grant which is being given by the American Government to the Peace Corps is likely to be forthcoming from the British Government?

Mr. Vosper: Voluntary Service Overseas is one of the organisations whose help I have much appreciated in formulating these proposals. When I receive its proposals for the coming year, I will have regard to what my hon. and learned Friend has said. In reply to the latter part of the supplementary question, I think it false to make a comparison with the American Peace Corps, because this is supplementary to our technical recruitment campaign, to which I referred in answer to an earlier Question.

Mr. John Hall: Can my right hon. Friend say how many young men and women have volunteered for service overseas?

Mr. Vosper: The current programme for Voluntary Service Overseas is 160, but there are other organisations which send a number overseas. I hope that for the year ahead there will be a considerable advance over that number.

Mr. Thomson: While joining with the hon. and learned Member for Billericay (Mr. Gardner) in paying tribute to Voluntary Service Overseas, may I ask if the Minister is aware that there is a need for putting this sort of help on a wider scale? Can he say whether it is his intention to set up some sort of co-ordinating organisation, or is his own Ministry taking direct responsibility for this?

Mr. Vosper: I welcome that supplementary question, because one proposal which will appear in the statement to be circulated in the OFFICIAL REPORT is, in fact, that there is to be a co-ordinating committee, on which will be represented all the bodies concerned, and which I hope will co-ordinate existing activities and stimulate further activities.

Sir J. Maitland: Is it not rather unfortunate that the American Peace Corps has had a tremendous amount of publicity, when we had been doing this


work long before they started? Is it not part of the duty of the Government to see that the people who do this sort of work get the maximum amount of help and publicity, so that others may know what they are doing?

Mr. Vosper: I quite agree with my hon. Friend. Organisations in this country have engaged in this field for some years, and I hope that this Question will help to publicise these activities. I am seeing in what way my Department may supplement them.

Mr. Gardner: Will not my right hon. Friend agree that of the 30 million dollars spent by the American Government on the Peace Corps last year, a considerable amount went in publicity, while not a single penny has gone into publicity concerned with Voluntary Service Overseas?

Mr. Vosper: That is a matter for Voluntary Service Overseas. I think they have received a fair amount of publicity, and I am anxious to see that they receive further publicity, but it should be on a wider front than one organisation.

Following is the statement:
In view of the great and growing interest in the service overseas by volunteers, meetings have recently been held in the Department of Technical Co-operation with voluntary societies and other bodies concerned. It was agreed that the task of recruiting volunteers and sending them overseas could best be discharged by the voluntary bodies;but that their work in this field could be made more effective by co-ordination. Accordingly plans for co-operation among the voluntary societies have been agreed.

2. With the encouragement of the Secretary for Technical Co-operation a Committee, to be known as the Voluntary Societies' Committee for Service Overseas, has been established. This Committee will have two functions:

(a) It will undertake general co-ordination of the work of voluntary societies in the whole field of voluntary service overseas by school-leavers, young graduates and other qualified or trained personnel.
(b) In view of the importance of the recruitment of young graduates and other qualified or trained personnel as volunteers the Committee will work out a scheme for graduates. It will formulate general policy for the recruitment of graduate volunteers;maintain contact with universities, colleges, industry and commerce in order to encourage applications for voluntary service;and disseminate information about the progress of schemes.

3. In relation to graduates, no less than with voluntary service generally, the voluntary societies will themselves remain responsible for all executive action connected with the recruitment, despatch and administration of volunteers, as well as the selection of projects.

4. Dr. J. F. Lockwood, Master of Birkbeck College, will be Chairman of the Committee, which will include amongst its members representatives of—

The National Council of Social Service.
The British Council of Churches and the Conference of British Missionary Societies.
Freedom from Hunger Campaign.
International Voluntary Service.
The National Union of Students.
The Oxford Committee for Famine Relief.
The Overseas Development Institute.
The Scottish Union of Students.
Sword of the Spirit.
United Nations Association of Great Britain and N. Ireland.
Voluntary Service Overseas.
The Department of Technical Co-operation.
The British Council.
There will also be six members from Universities, Colleges of Advanced Technology, schools, industry and commerce.

5. The National Council of Social Service has agreed to provide a Secretariat for the Committee from the secretarial staff of the recently established Standing Conference of Voluntary Organisations Co-operating in Overseas Social Service.

6. The Committee will start work at once on planning a campaign for recruitment of graduates as volunteers for the summer of 1963. If adequate public support is forthcoming a substantial number will be recruited.

7. Meanwhile for 1962 it is planned to send fifty graduates to Africa on a pilot scheme for volunteer teachers. Her Majesty's Government will pay for return passages and terminal grants for these volunteers and meet some other incidental costs. They will go mainly to schools for which voluntary societies are recruiting staff. The Overseas Appointments Bureau, Catholic Overseas Appointments, Voluntary Service Overseas, the British Council and the Department of Technical Cooperation are co-operating in this scheme, which is being administered by Voluntary Service Overseas.

8. In addition, the United Nations Association, the National Union of Students and International Voluntary Service are planning to send abroad this year small numbers of graduate volunteers for a year or more. Voluntary Service Overseas are continuing to build up their existing substantial programmes for sending school-leavers overseas. If suitable schemes are presented by those bodies the Department of Technical Co-operation will be ready to provide financial support up to an amount similar to that for the pilot scheme for volunteer teachers.

Information Expenditure

Mr. Mayhew: asked the Secretary for Technical Co-operation what information work will be curtailed or postponed as a result of the cut in information expenditure overseas in 1962–63.

Mr. Vosper: Total estimates for overseas information work in 1962-63 are, of course, over £1 million more than last year. Within that total, many small reductions of staff and services have been made in order to reduce expenditure overseas. They have been made primarily in friendly countries, where reliable news about Britain is available through other channels, and generally where economies could be achieved without serious damage.

Mr. Mayhew: Nevertheless, is not the Minister aware that these cuts, which are sudden and unexpected, can be very wasteful, frustrating and damaging to our reputation overseas? Will he say what he is doing to put the future of the information services on a long-term basis so that they can plan over a period of years and know where they stand?

Mr. Vosper: These savings flow from the statement which my right hon. and learned Friend the Chancellor made last July. The hon. Member will have noticed, so far as costs are concerned, that full allowance has been made, and, in fact, some new services have been started up in the current year. In regard to a stable policy for the future, I am as anxious as the hon. Member is to see that achieved, but I cannot go further than my original statement today.

Overseas Recruitment (White Paper)

Mr. Skeet: asked the Secretary for Technical Co-operation if he will make a statement on the overseas recruitment work of his Department.

Mr. Vosper: Yes, Sir. I am issuing a White Paper on this subject, copies of which will be available this afternoon.

Mr. Skeet: Is my right hon. Friend aware that the House will welcome the publication of the White Paper? May I ask him whether it will show a continued need for overseas service?

Mr. Vosper: Yes, Sir. The White Paper will show a continued need for overseas service on the part of people from this country. It will, however, show that that service, in the main, in the future will be of a short-service variety for a wide variety of specialised occupations, and will not, on the whole, provide for the full career service which was customary in the past.

Mr. G. M. Thomson: Will there be a continued need for those officers at present serving overseas? Does not the right hon. Gentleman agree that the greatest need is for agricultural and veterinary officers, and that, at the moment, these experts are flooding out of Africa because of the lack of some sort of scheme of continuity which would allow them to go on beyond the point of independence?

Mr. Vosper: I should like the hon. Member to read the White Paper, when he will see the arguments fully deployed there. Any officers coming back from overseas for whom there is a continuing demand will be certain of receiving employment, but the trouble is that the requests I am receiving do not always coincide with the terms of service of existing officers.

Mr. Tilney: May I ask my right hon. Friend whether he will bear in mind that the neglect shown to those who have served overseas in the past may be detrimental to recruiting in the future?

Mr. Vosper: I am well aware of my hon. Friend's interest in this subject, and I have that matter very much in mind.

Oral Answers to Questions — HOUSING

Physically Handicapped Persons

Mr. Milne: asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will take steps to enable him to issue instructions to local authorities in regard to the building of specially constructed houses for handicapped persons.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Dr. Charles Hill): Some general advice on the provision of houses for the physically handicapped has been given by my Department, and I hope in due


course to give further guidance in the light of research that is going on in this field. In the meantime, officers of the Department will be glad to help on any particular problem that a local authority may have.

Mr. Milne: I am grateful to the Minister for that reply. Would he care to look at the excellent scheme devised by the Housing Committee of the Blyth Corporation on this matter, in which the features needed for handicapped persons were embodied at the time of house-building? Will he have a look at the scheme?

Dr. Hill: I am aware of that.

Central Heating Installations

Mr. Box: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what recommendations he has received in regard to the more efficient use of living accommodation by the installation of central heating systems;and whether he will make a statement.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Geoffrey Rippon): Recommendations on this subject were included in the recent report "Homes for Today and Tomorrow" prepared by the Housing Standards Sub-Committee of the Central Housing Advisory Committee. They were brought to the notice of local authorities in Circular 13/62 which was sent out in February.

Mr. Box: Does not my hon. Friend agree that the present archaic custom of increasing rating assessments on central heating and other such amenities is a direct discouragement to the carrying out of these recommendations? Will he consult his counterpart at the Treasury to see whether some new approach to this problem can be made in the future?

Mr. Rippon: I think that, other things being equal, if a house has better amenities, it is likely to command a higher rent, and this is properly reflected in Its rateable value.

Mr. Lipton: Will not the hon. Gentleman be satisfied with the trebled assessment which he will get next year, when the new valuations come into force? Why put this additional burden upon occupiers, when the burden is to be trebled next year, anyhow?

Mr. Rippon: I think the hon. Gentleman is trying to suggest that the rates will be trebled, but if the rateable value goes up the rate poundage should in fact fall. That, at any rate, is the theory.

Mr. Snow: Are not such valuation increases in conflict with the clean air legislation which already exists? Are they not a discouragement?

Mr. Rippon: No.

Mr. S. I. Sansoni

Mr. V. Yates: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he has studied the further evidence in the case of Mr. S. I. Sansoni sent to him by the hon. Member for the Ladywood Division of Birmingham;and whether he will reconsider his decision not to take action in this matter.

Mr. Rippon: If the information I gave in my reply of 3rd May was inaccurate, I apologise to the hon. Member and to the House. I gave the facts as they were then known to the Ministry.
My right hon. Friend has reconsidered this case in the light of the new information which the hon. Member has provided, but he still does not think that it indicates any need for new legislation.

Mr. Yates: I appreciate that statement, but in view of the fact that this tenant's rent was increased from £9 to £12 and from £12 to £14, which the city council thought was excessive, and which has moved it to take steps to acquire the property compulsorily, and since the evidence that I am now submitting tends to confirm that there are dozens of cases in Birmingham—according to the housing manager—will not the Minister take action so that tenants of this kind may be protected from extravagant demands being made upon them?

Mr. Rippon: The facts of this case are complex. There may now well be an inquiry into the compulsory purchase order. On the last occasion I intimated that the Birmingham City Council found no merits in this man's case. I think that it was then referring to the housing aspects. It is now clear that the Council is concerned about the rent aspect of the matter. The hon. Member was quite justified in raising this case. We must now leave it for further development.

Oral Answers to Questions — LOCAL GOVERNMENT

Civil Defence (Dispersal Scheme)

Mr. Hayman: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he will make a statement on the plans for the evacuation of refugees to Cornwall in the event of a nuclear attack on Great Britain.

Mr. Rippon: I am sending the hon. Member a copy of a circular sent to local authorities on 28th March, which explains that a dispersal scheme is to be prepared in case it is needed in an emergency. Under the scheme most of Cornwall would be a reception area. Arrangements for the planning of the scheme in detail are being discussed with the local authority associations and a further circular will be issued later.

Mr. Hayman: May I ask the Parliamentary Secretary to take into account the fact, that his plans may well be frustrated by the Minister of Transport, because there is a danger of the main line from Plymouth being closed altogether? As we can get no assurance from the Minister of Transport, will he do his best to get one, so that we may be assured, at least, of having a railway line?

Mr. Rippon: We are satisfied that we can provide an effective scheme.

Mr. Scott-Hopkins: Is my hon. Friend confident that the local authorities in Cornwall are capable of dealing with the increased population which will go down there, if the need arises?

Mr. Rippon: All these questions as to how the situation will be dealt with will have to be discussed with the local authorities concerned. The maximum number of people which we think Cornwall would have to receive would be about 350,000.

Premises, Leytonstone (Planning Appeal)

Mr. Sorensen: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether, before accepting the appeal against both the judgment of his own inspector and

the wishes of the Leyton Borough Council in respect of premises in High Road, Leytonstone, he sent a representative to see the heavy traffic in that thorough fare, and, in particular, the number of motor car show-and-sales rooms already existing in the High Road;and what account he took of the traffic aspects of the matter.

Mr. Rippon: The premises affected by the appeal were visited by the inspector who held the inquiry and his report dealt with the amount of traffic using the High Road and the number of garages and car sales premises in the vicinity. No further inspection was made by an officer of the Ministry before the appeal was decided. The Ministry of Transport was consulted and agreed that dismissal of the appeal would not be justified on traffic grounds alone.

Mr. Sorensen: Does not the Parliamentary Secretary appreciate that, although it is perfectly true, as he says, that the inspector saw the premises and the vicinity for himself, his recommendation was rejected by the Minister? In these circumstances, would it not have been better for the Minister either to go himself or to send somebody to see the congestion in that part of Leyton, with the result that he might have come to a different conclusion?

Mr. Rippon: Very full evidence was give at the inquiry. The point at issue was that the premises were already used as a shop. Therefore, this did not seem an unreasonable proposal.

London Local Government (Reorganisation)

Mr. Sorensen: asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will now indicate the approximate timetable and progressive stages of implementation in the proposed London local government reorganisation;and whether the whole scheme affecting all existing local authorities will operate as from a specified date.

Dr. Hill: It remains the Government's aim, as stated in the White Paper on London Government (Cmnd. 1562), to introduce legislation in time for the new


authorities to be elected and to take over from the existing authorities in April, 1965, in all cases.

Mr. Sorensen: Can the right hon. Gentleman give any indication in the interim period as to the stages through which this reconstruction will pass, because there is a good deal of ambiguity and a certain amount of suspense, which might be alleviated if the various authorities knew for certain that on certain dates certain stages would be passed?

Dr. Hill: For much of that the hon. Gentleman will have to await the Bill, but if he has a particular issue or service in mind and he will table a Question, I will seek to help him, though I cannot guarantee in advance to help him.

Mr. Mayhew: Will the right hon. Gentleman give an assurance that he will give a great deal more careful consideration to the remaining proposals than he did to his proposals on education in the White Paper, which were criminally slapdash and haphazard?

Dr. Hill: I have given a great deal of consideration to the problems which I promised to consider. There has been nothing either criminal or slapdash about that.

Coast Protection

Mr. Loveys: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what proportion of the sum expended on coast protection since the Coast Protection Act, 1949, has been paid by individual property owners contributing to works schemes as allowed for under Section 7 of the Act.

Mr. Rippon: Between 1 and 2 per cent.

Mr. Loveys: Does not my hon. Friend agree that the enormous amount of work which has to be undertaken by marine local authorities which operate works schemes is out of proportion to the amount recovered? Does he not think that in future the amounts which would be recovered from works schemes should be included in the grants supplied by the Government in the first place?

Mr. Rippon: There is a great deal in what my hon. Friend says. My right

Friend has raised this matter with the local authority associations. All but one of them have replied. So far all are in favour of not making any more of these works schemes.

Mr. Loveys: Is my hon. Friend aware that individual property owners concerned and marine local authorities will be greatly relieved at the enlightened view now being taken by the Government concerning this piece of Socialist legislation? Is there any hope of retrospective action concerning works schemes which have taken place but where appeals have not yet been considered by my right hon. Friend?

Mr. Rippon: In the ordinary course of events I should not have thought that retrospection was possible. There are a number of cases now before my right hon. Friend. No doubt we can bear in mind the point which has been made.

Rates

Mr. Ridsdale: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what communication he has received from the Conservative Women's Annual Conference about reform of the rating system;and what reply he has sent.

Dr. King: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what representations he has received from the Conservative Women's Annual Conference on the current burden of rates;and what reply he has sent.

Dame Irene Ward: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what representations he has received from the Conservative Women's Conference about the further relief of rate burden;and what reply he has sent.

Mr. Rippon: My right hon. Friend has received no communication, but I addressed the conference.
My right hon. Friend sees no present case for further inquiry by committee. It may be, however, that the recent White Paper on Revaluation for Rates in 1963 could usefully be followed up, later this year, by a document giving a wider review of our local government finances as a whole.

Mr. Ridsdale: Would not my hon. Friend agree that the resolution passed at the Conservative Women's Annual Conference was very similar to Motion No. 99 on the Order Paper signed by ninety-nine Members of this House? Does not his right hon. Friend the Minister think that ninety-nine is a slightly high temperature? Is he aware that the reason for this strong feeling at the moment is the very heavy burden being placed on the small fixed income group? Will he ensure that early action is taken to relieve this section, if nobody else?

Mr. Rippon: I think that the Motion was similar but different. I hope that my hon. Friend has not missed the significance of the second part of my Answer to his Question.

Dame Irene Ward: Is my hon. Friend aware that when he answered the Resolution at the Conservative Women's Annual Conference he was more forthcoming than his right hon. Friend when he answered the debate on the Motion proposed by my hon. Friend the Member for Harwich (Mr. Ridsdale)? Can my hon. Friend tell me when we in the House of Commons will see some of the ideas which we put forward acted upon? Is he aware that I am getting extremely tired of sensible Motions and ideas being put forward which are sat upon by the Executive? The Executive would get on much better if it would pay attention to sensible people like its own back benchers.

Mr. Rippon: I answered both discussions and find no discrepancy in my replies. The Motion of my hon. Friend the Member for Harwich (Mr. Ridsdale) called for a committee. The Motion at the Conservative Women's Annual Conference simply called for the Government seriously to consider the present rating system. The difficulty about a committee is that it is apt to knock the ball into the long grass and produce some years later an unacceptable report.

Mr. Shinwell: Do I understand from the hon. Gentleman that the Government reject conference decisions?

Mr. Rippon: On the contrary, we readily accepted the demand that we should consider something that we are always considering.

Mr. Ridsdale: Is my hon. Friend aware that I welcome the fact that he does not want to have a committee, because what we really want is early action?

Mr. Rippon: I appreciate my hon. Friend's point.

Mr. Pargiter: Is the hon. Gentleman aware that this is not really a year in which Ministers will take notice of what takes place at the Conservative Women's Annual Conference but that there soon will be a year when more notice will probably be taken?

Mr. Rippon: We always take notice of all representations made to us from all quarters.

Airfield, Fradley

Mr. Snow: asked the Minister of Housing and Local Government and Minister for Welsh Affairs why he withdrew his support for loan sanction to the Lichfield Rural District Council in regard to the sale of the Royal Air Force airfield, Fradley, eight days before the sale was due to take place.

Mr. Rippon: The amount which the Lichfield Rural District Council was willing to pay, and for which my right hon. Friend was prepared to give loan sanction, was not in the region of that which the Air Ministry expected, and was in the event able to obtain.

Mr. Snow: I desire to put on record the courtesy and patience the Minister displayed in the negotiations concerning this airfield, in which I was a party, which lasted for many months. Is the Minister aware that there are certain undesirable features about this sale? Is he aware that on three occasions the district valuer, presumably at the Air Ministry's suggestion, increased his valuation? The sale is due for completion on 13th June. At no time was the Air Ministry prepared to give any indication of the price it wanted. The short notice of the change of policy by the Department seems to me at least to indicate that the public interest may not have been well served.

Mr. Rippon: I do not think that there was a change of policy. What happened was that my right hon. Friend agreed to give loan sanction up to £150,000.


Unfortunately, negotiations with the Air Ministry broke down. We agreed with the council that it would be well advised not to offer a higher figure. The real justification for the Air Ministry's view is that in the event it obtained £39,000 or so more than the council offered.

Mr. Snow: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he is satisfied that, when approving the Staffordshire County Development Plan, account was taken of the fact that the Royal Air Force, Fradley, airfield was surplus to Air Ministry requirements and therefore should be included in the proposed green belt only three miles away;and what steps he will advise the county planning authority to take in support of the Lichfield Rural District Council to prevent further spoliation of the countryside by outside and unsightly dumps such as those in the near vicinity of this airfield.

Mr. Rippon: The decision that this airfield was surplus to Air Ministry requirements had not been taken when the county development plan was approved in August, 1958. My right hon. Friend does not think that the county council needs any special advice from him about the exercise of its planning powers in this matter.

Mr. Snow: Is the hon. Member aware that this Government hold, outside the question of dockyards, airfields and other major installations, no less than 462,000 acres of land, of which 28,000 are on current sale? Is he further aware that the case of Fradley airfield has demonstrated a complete lack of co-ordination between his Ministry and the Air Ministry? If he will visit my constituency I will show him the most unseemly dumps of scrap scattered here and there, which cannot be moved because there is a shortage of staff on the local planning authority and the local authority.

Mr. Rippon: I cannot confirm or deny the figures referred to in the first part of the hon. Member's supplementary question.

Mr. Snow: They came from the Ministry of Defence.

Mr. Rippon: As to the second part of the supplementary question, I do not agree with the hon. Member's assessment of the situation.

Mr. Snow: On a point of order. In view of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

Dawley (New Town)

Mr. W. Yates: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he has completed his study of the suitability of Dawley as a site for a new town for the relief of congestion in the Birmingham area;and whether he will make a statement.

Dr. Hill: Yes, Sir. Having considered the report made to me by Mr. Sheppard Fidler I believe that a satisfactory new town could be built at Dawley to include ultimately 80,000 to 90,000 people, of whom I hope that over 50,000 could come from Birmingham. The building of a new town here will have its difficulties, but it will make minimum demands on agricultural land.
I have therefore decided to designate a site for a large new town at Dawley, subject to what may emerge from the necessary consultations and consideration of objections. I propose to start consulting the local authorities concerned at once.
I should like to take this opportunity of thanking Mr. Sheppard Fidler for his most valuable report and the Corporation of Birmingham for agreeing to make his services available.

Mr. Yates: It is not very often that I am able to congratulate the Government, but in this case they have taken an extremely courageous and wise decision. Is my right hon. Friend aware that to use, for this new city, land which was made derelict as a result of the first Industrial Revolution, is a splendid idea? Is my right hon. Friend quite certain that this new city will provide sufficient employment for all the people in the area?

Dr. Hill: I am grateful to my hon. Friend for what he has said. This site has involved problems and a great deal of expense but, on balance, it has been thought to be a wise step. On the second


point raised by my hon. Friend, it is certainly our intention to seek to provide sufficient employment there for the whole population. I hope to secure the co-operation of the Birmingham City Council in persuading some of the industry now in that city to move out, thus helping to relieve the congestion in the city.

Mr. J. Silverman: Will the right hon. Gentleman also consult his right hon. Friends, especially the President of the Board of Trade, in order to consider what can be done about shifting industry to the area? When a new population is moved into such an area as this it is vital that industry should also be there, otherwise the new town cannot be a success.

Dr. Hill: I agree entirely with the hon. Member. I shall consult my right hon. Friend the President of the Board of Trade.

Mr. Cleaver: Is my right hon. Friend aware that this news will be greatly welcomed by many of the 50,000 people on the housing list in Birmingham? Can he give any idea when the project is likely to start, and will he bear in mind the absolute necessity for all the local authorities and industry to co-operate in this venture?

Dr. Hill: Yes. I will start immediately on the first stage, which will consist of consultations with the local authorities concerned. As soon as these are completed a draft designation order will be made, to which objection can be taken, and as soon as that phase is over I shall make the designation order either in the original or in a modified form.

Oral Answers to Questions — NATIONAL FINANCE

Sport (Disabled Persons)

Mr. K. Lewis: asked the Chancellor of the Exchequer whether he will arrange for a certain proportion of the money being made available for sport, in implementation of the Wolfenden Report on Sport, to be given to the British Sports Association for sport for the disabled.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): The funds for voluntary organisations concerned with sport

referred to in my statement of 8th May are to be allocated by my right hon. Friends the Minister of Education and the Secretary of State for Scotland. I suggest, therefore, that the Association should make its needs known to my right hon. Friends.

Goya Picture (Committee's Report)

Mr. A. Royle: asked the Chancellor of the Exchequer when Her Majesty's Government will finish considering the Report received by his Department in February 1962, on the theft of the Goya portrait;when he intends to publish the greater part of this Report;and if he will make a statement.

Mr. Selwyn Lloyd: The Government have considered this Report, and intend to publish it, with some necessary omissions for security reasons, very shortly.

Mr. Royle: Why has it taken so long to publish this Report? Has the theft of pictures this week speeded things up? Can my right hon. and learned Friend tell me whether the report in a Sunday newspaper that the National Gallery applied to the Treasury, prior to the theft, for a grant of £100,000 to improve security arrangements is correct?

Mr. Speaker: The last part of the hon. Member's supplementary question is out of order. The rest is all right.

Mr. Lloyd: The answer to the first part of my hon. Friend's supplementary question is, "No, Sir".

Mr. Lipton: Can the right hon. and learned Gentleman now say where the picture is?

Mr. Lloyd: No. Perhaps the hon. Member can help me.

Company Directors (Fees)

Mr. Jay: asked the Chancellor of the Exchequer to what extent it is the intention of Her Majesty's Government that the policy contained in Command Paper No. 1626, Incomes Policy: The Next Step, should be applied to the fees of company directors.

Mr. Selwyn Lloyd: The policy set out in the White Paper applies to all forms of personal income, including directors' fees.

Mr. Jay: Does that mean that the Government will intervene in future to decide the level of directors' fees?

Mr. Lloyd: No. Sir. We hope and believe that common sense will have regard to our policy.

Mr. Dudley Williams: In view of the fact that the only reason why the 2½per cent. rule should be breached is to attract people to a certain industry, and since there is no scarcity of candidates for this House, will my right hon. and learned Friend bear in mind the strong views of the hon. Member who put down this Question when he is considering any increase in emoluments for Members of Parliament?

Mr. Lloyd: I am not quite certain that that supplementary question arises out of the original Question.

Mr. Nabarro: Can my right hon. and learned Friend confirm that there is no evidence to support the statement that the fees of company directors have increased at all in the last twelve months? Is not he aware that, since last July, business has been exceedingly difficult for company directors, and that they are much more likely to suffer a diminution of fees than any increase, as a result of my right hon. and learned Friend's activities?

Mr. Lloyd: I am quite certain that there is no evidence of any general increase.

Cost of Living

Mr. Jay: asked the Chancellor of the Exchequer to what causes he attributes the rise of 6.4 points in the cost-of living index between April, 1961, and April, 1962.

Mr. Selwyn Lloyd: 2·2 points are due to the current shortage of potatoes and other seasonal factors affecting the price of foodstuffs. 0·6 of a point is due to increases in rents and rates. The remaining increase of 3·6 points, including 1·2 points on account of indirect taxation, is essentially the consequence, direct or indirect, of personal incomes rising faster than national production.

Mr. Jay: As the Chancellor keeps telling us that the object of his pay pause policy is to stabilise the value of

money and prevent prices from rising, is it not remarkable that in the year of the pay pause we have had the fastest rise in the cost of living for many years?

Mr. Lloyd: The reason for this increase has been the prior increase of incomes at a higher rate than national production. I very much hope that later in the year we shall see the effects of the pay pause.

Mr. Ridsdale: Can my right hon. and learned Friend say how many points have been attributable to the increase in the price of electricity and coal, the increase in the price of gas and the increase in the price of rail fares?

Mr. Lloyd: I cannot give those figures without notice.

Mr. S. Silverman: Will the right hon. and learned Gentleman explain how he can possibly hope to maintain effective control over the rise in wages if he makes no attempt whatever to control the rise in prices?

Mr. Lloyd: That is one of the troubles about inflation. In order to bring it under control one has to take certain steps, as we had to do last July, which have the effect of increasing the cost of living. There are some interesting figures to be given by my hon. Friend the Finacial Secretary in answer to a later Question about the extent to which personal incomes have increased much more than the cost of living. They have also increased more than production, and that is the reason for the present position.

Mr. Jay: Did not the Chancellor admit in his first Answer that part of the rise is due to increases in indirect taxation for which he is responsible?

Mr. Lloyd: I should like the right hon. Gentleman to realise that in order to stop an inflationary situation one has to take that kind of action which may involve direct or indirect taxation.

Mr. Jay: Does not the Chancellor understand that if he had made increases in direct taxation instead he would have curtailed spending without raising prices?

Mr. Lloyd: I do not think that such increases would have taken place in


time. Regarding Income Tax, I had to take immediate action indirectly in order to deal with the demand at the time.

Sweets and Ice Cream

Mr. Milne: asked the Chancellor of the Exchequer how the increased prices now being charged for sweets and ice cream will affect his estimate of the revenue to be derived from them during the current year.

The Financial Secretary to the Treasury (Sir Edward Boyle): My right hon. Friend's estimate of the revenue took into account the effect on consumption of increased prices attributable to the tax. It is not possible to say how this estimate will be affected by any changes in tax-exclusive prices.

Mr. Milne: Does not the hon. Gentleman consider deplorable the manner in which certain sweets and ice cream manufacturers have increased the prices of their products following the Budget proposals? Will the Chancellor consider giving the same sort of lecture to these people as he has been giving to the wage earners in the past few months?

Sir E. Boyle: The Chancellor made it clear during the Committee stage discussions on the Finance Bill on 16th May that in his view when an increase in Purchase Tax is made the increase, and no more, should be passed on to the consumer.

Greyhound Racing (Taxation)

Mr. A. Lewis: asked the Chancellor of the Exchequer if he will state the Treasury receipts from Pool Betting Duty collected on greyhound totalisators for the months of January, February and March, 1962, divided as between the normal 10 per cent. duty and the 10 per cent. surcharge imposed since 26th July, 1961, and similar figures for Bookmakers' Licence Duties on greyhound racecourses for the same month.

Sir E. Boyle: I will, with permission, Circulate the reply in the OFFICIAL REPORT.

Mr. Lewis: Will the figures show that, due to the discriminatory practice of taxing just greyhound racing and not horse racing, there is no tax due to the Treasury from horse racing? Will the

hon. Gentleman do something about altering the present discriminatory practice?

Sir E. Boyle: The figures show a slight fall in greyhound totalisator betting. It is not possible to say that they establish a trend, especially as the surcharge has been removed. It has been announced that the scope of the Pool Betting Duty is to be the subject of a review.

Following are the figures:


Month
Pool Betting Duty on greyhound totalisators
Bookmarkers' Licence Duty



Duty
Surcharge
Duty
Surcharge



£
£
£
£


January
366,426
36,642
96,074
9,607


February
390,756
39,076
101,769
10.177


March
444,002
44,400
124,189
12,419


Net Receipts
1,201,184
120,118
322.032
32,203

Wages and Salaries

Mr. A. Lewis: asked the Chancellor of the Exchequer whether he will publish in HANSARD a table of figures to show by how much wages and salaries would have had to rise each year since 1951 to take account of the rise in the cost of living and the depreciation in the purchasing value of the £sterling.

Sir E. Boyle: Yes, Sir. With permission I will circulate the figures in the OFFICIAL REPORT.

Mr. Lewis: Is not it about time that the Minister appreciated that this Government have been in power for over eleven years and that each year they have told us that they will make the £worth something;that they are going to mend the "hole in the pocket" and cut the cost of living? When do they propose to get down to doing this? Is he aware that the £is now worth less than at any time in the last eleven years? When do the Government propose to take some action?

Sir E. Boyle: I hope that the hon. Gentleman will get down to studying the


figures to be circulated in the OFFICIAL REPORT. They are remarkable and provide the clearest indication I have seen—I am grateful to the hon. Gentleman for having put down his Question and giving me the chance to give this Answer—of the extent to which inflation has been due to increases in personal incomes which have increased more rapidly than the volume of production.

Mr. Jay: Is the hon. Gentleman aware that the more figures the Government circulate the faster the cost of living rises?

Sir E. Boyle: If the right hon. Gentle. man will study the Answer of my right hon. and learned Friend, he will find a full analysis of inflation during the past year. These figures show, more clearly than any I have ever seen, the need for an incomes policy, and I hope they will be accepted by the House.

Mr. Wade: Will the figures show to what extent increases in prices have led to automatic increases in wages and salaries, thus maintaining the vicious circle?

Sir E. Boyle: The figures shown are in answer to the Question which was put down, but may I say to the hon. Gentleman that if we have excess demand, as we had last July, no power on earth can keep stable prices unless one takes sufficient measures on the fiscal side to equate supply and demand, as we did on that occasion.

Following are the figures:

The second column in the table below shows the increase in average wages and salaries per head, taking 1951 equal to 100, which would have been required to meet the rise in the cost of living, as measured by the consumers' price index. The third column shows the increase which actually occurred.

—


Required increase
Actual increase


1951
…
…
100
100


1952
…
…
106
107


1953
…
…
108
113


1954
…
…
110
191


1955
…
…
113
128


1956
…
…
118
138


1957
…
…
122
146


1958
…
…
125
151


1959
…
…
126
158


1960
…
…
127
167


1961
…
…
130
177

MINISTER WITHOUT PORTFOLIO

Viscount Lambton: asked the Prime Minister to what extent it is to be the responsibility of the Minister Without Portfolio to mediate between employers and the trade unions.

The Prime Minister (Mr. Harold Macmillan): None, Sir.

Viscount Lambton: I thank my right hon. Friend for his reply. Will he also give an assurance that from no source in any way related to his office will there come any suggestion that the Minister Without Portfolio has mediated when in fact he has not, as such suggestions, when they appear to be totally unfounded, cause my right hon. Friend to appear in a most eccentric light?

The Prime Minister: No statement of any kind was made from my office.

Mr. M. Foot: Can the Prime Minister say whether he has made any investigation into the widespread story, published in a large number of newspapers, that the Minister Without Portfolio had had discussions with the port employers on this matter? Does not he think something much more honest and straightforward should be said by the Government in view of the repudiation of these charges made by Mr. Crichton, and does not he think that the Government should make a full statement of what happened?

The Prime Minister: I know that Lord Mills played no part except as a member of the Cabinet. No statement to the contrary was made by me or by a member of my office.

Viscount Lambton: May I have an elucidation of this point? Will my right hon. Friend give an absolute assurance that from no source of which he has any knowledge was information imparted to suggest that Lord Mills played any part in this mediation?

The Prime Minister: Yes, Sir, so far as I am aware, absolutely.

Mr. Jay: In order to clear up the matter, may I ask whether the Prime Minister is saying that the Government did not interfere in any way in an effort to influence these wage negotiations?

The Prime Minister: No, Sir. The employers themselves said in a statement immediately after the settlement that they were made perfectly aware of the attitude of the Government and of the result of their settlement on the incomes policy. There was no doubt about that at all. But they thought that there were particular circumstances which justified them in going beyond the policy.

BRITISH COUNCIL OF CHURCHES (DISARMAMENT AND NUCLEAR TESTS)

Mr. Driberg: asked the Prime Minister if he has considered the statement on disarmament by the international department of the British Council of Churches, approved on 4th April at a full meeting of the Council, and the resolution urging Her Majesty's Government not to be a party to the renewal of nuclear tests, passed nemine contradicente at the same meeting, copies of which have been sent to him;and what reply he has made to these representations.

The Prime Minister: I have considered both these documents which are, of course, sincere and thoughtful contributions to the discussion of these difficult problems.

Mr. Driberg: Will the Prime Minister say whether he has in fact considered the three specific proposals made at the end of the longer of these documents? Also, does he recall that on 8th May he promised he would do what he could to ensure that Sir Bernard Lovell would have facilities to meet the American scientists engaged in the coming high-altitude tests? As it is now announced that these tests are to begin in three days' time, has the right hon. Gentleman been able to do anything about it?

The Prime Minister: Perhaps the second part of the supplementary question could be put on the Order Paper as it is a separate question. Regarding the Resolution of the British Council of Churches, as I say I have considered it and know how sincere they are in their feelings. I do not altogether accept the hon. Gentleman's summary of the resolution. The resolution urged Her Majesty's Government to press for no more than

the minimum detection machinery necessary to give reasonable assurance that an agreement will be observed.
That is exactly the point on which we have been engaged all these months at Geneva. It goes on to say:
Her Majesty's Government should not be a party to a final decision to renew tests without ensuring that the value of an agreement on atmospheric tests alone is explored.
That is the offer which we made and which was rejected—it has been over and over again rejected—by the Soviet Government. While I fully recognise the sincerity of the document, I do not think—I am sure it is by misadventure —it is quite accurately summed up in the hon. Gentleman's Question.

Mr. Driberg: The right hon. Gentleman has not referred to the specific paragraphs to which I drew his attention. Does he agree, for instance, that there should be a declaration by Her Majesty's Government that Britain will not be the first to use strategic nuclear weapons, which is demanded there? When he says that my other question does not arise, or is a separate question, is it not the case that there is also the demand for the ending of testing referred to in my Question on the Order Paper, and that these are the next tests?

The Prime Minister: Again, the last part of the supplementary question relates to tests but the Question related to the renewal of nuclear tests. The question of the strategic use of weapons is wholly different.

Mr. G. Brown: Would not the Prime Minister agree that the problem with all these statements is that anybody may take a sentence out of context and prove with it almost anything they like? Is it not the fact that what we are most concerned with is getting an agreement which will end this beastly business of testing, especially in the atmosphere, and that for the moment it is Russia which is holding it up?

The Prime Minister: I think that the right hon. Gentleman has very accurately summarised the position. But, as I said, knowing the sincerity with which these views are held, I thought it right to recognise that, although pointing out that the actual points made to me were exactly the ones that, with the general support of the House, we have been. pressing forward.

DEPUTY PRIME MINISTER OF NEW ZEALAND (TALKS)

Mr. Healey: asked the Prime Minister if he will make a statement on his talks with the Deputy Prime Minister of New Zealand.

The Prime Minister: Some of my colleagues and I have had a preliminary talk with the Deputy Prime Minister of New Zealand. There will be further talks during Mr. Marshall's visit. These discussions will, of course, be confidential.

Mr. Healey: Is the Prime Minister aware that there is strong feeling on both sides of the House, in view of the great sacrifices made by New Zealand on behalf of this country in two world wars and its exceptional dependence upon exports to this country, that we should not join the Common Market without cast-iron guarantees that New Zealand's trade with Europe as a whole, including Britain, will not be disadvantageously affected? In particular, can the Prime Minister assure the House that Her Majesty's Government will not agree to any transitional arrangements for New Zealand's trade if we join the Common Market without solid and clear arrangements that at the end of the transitional period New Zealand's trade will be maintained by a permanent agreement at the existing level at least?

The Prime Minister: I do not want to be drawn into the details of these negotiations, which are just beginning. I am sure that the hon. Member would feel it would be unwise for me to do so. On the question about Mr. Marshall, we suggested that the Deputy Prime Minister of New Zealand should visit this country because, although we have been in the closest touch with officials all through, we thought that a visit from him would be satisfactory, and it is exactly these questions that we are discussing with him.

Mr. Healey: I do not want to draw the right hon. Gentleman into too much detail on this, but may I ask whether he can assure the House that Her Majesty's Government will not enter into arrangements with the Common Market countries which do not guarantee New Zealand, to quote the Lord Privy Seal, at

least outlets in Europe as a whole comparable with those which it now enjoys in Britain?

The Prime Minister: Had I not answered the first question I would not have been so well placed to answer the second. I think that it would be wise for me to stand by the general declaration Which Her Majesty's Government made on these matters and allow the negotiations to proceed.

Mr. P. Walker: Is my right hon. Friend aware that the Deputy Prime Minister of New Zealand stated last week that he was not willing for the life of his country to be fixed for seven years or any other transitional period by the Common Market? Will my right hon. Friend assure the House and take the opportunity of confirming to the Commonwealth that we will not subject the life of Commonwealth trade to a transitional period?

The Prime Minister: All these matters must be considered as a whole. I repeat the broad declaration of the Government and I still say that it is better to see how the negotiations work out and whether or not satisfactory arrangements cannot be made.

Mr. Snow: While it is generally agreed that the overall trade of New Zealand should not be adversely affected by these negotiations, may I ask whether it would not be desirable to suggest to this distinguished gentleman that Canada is trying to find markets which would be a safeguard to that country and that New Zealand, by virtue of its geographical position, might also well take that sort of obvious step?

The Prime Minister: I am grateful for that suggestion. I think that the New Zealand Government are pursuing that, quite apart from any Common Market question, because it is obvious that, quite apart from whether Britain does or does not enter the Common Market, this market itself cannot absorb an indefinite amount. Therefore, it is obviously to their advantage to find other markets as well as the British market.

Mr. Woodburn: If binding agreements of any kind are made, would they not be binding on both sides, and is the Commonwealth prepared to tie itself indefinitely to agreements of this kind?

The Prime Minister: I think that it would be wiser to let the negotiations proceed and let the Government see what conclusions they reach and put forward their proposals, should they decide to do so, and let the House discuss them as a whole.

NUCLEAR TESTS

Mr. A. Henderson: asked the Prime Minister whether, following the proposal of the Mexican Government at the Geneva Conference, it is now the policy of Her Majesty's Government that no nuclear testing will be carried out by Her Majesty's Government after 1st January, 1963.

The Prime Minister: I have made it clear that the Mexican proposal will be considered. The right hon. and learned Gentleman is suggesting a unilateral undertaking by Her Majesty's Government, however, and I do not think this would assist the negotiations.

Mr. Henderson: In view of the announcement that the United States Government propose in a few days' time to carry out high-altitude tests, 400 to 600 miles into space, and the fact that the Soviet Government have announced their intention of carrying out similar high-altitude tests, may I ask the right hon. Gentleman whether, if he is not prepared to take unilateral action, he would take the initiative in proposing to President Kennedy and Mr. Khrushchev that an agreed specified date should be arranged on which all tests should be ended, as suggested by the Government of Mexico?

The Prime Minister: Of course I sympathise with the right hon. and learned Gentleman's interest in this matter, which indeed we all share. The question is both the effective method and the right moment to make any new suggestions for some new negotiations.

Mr. G. Brown: Since the British nuclear deterrent died with Blue Streak, could we not at least say that we will not conduct any more nuclear testing because there is no point in it?

The Prime Minister: If I accepted, which I do not, the premise in the right hon. Gentleman's question, I do not see how to abandon something which he

says is no good to us is such a wonderfully generous gesture for others to follow.

Mr. S. Silverman: Would not the Prime Minister agree that in the case of these high-altitude tests, 400 to 600 miles high, it might be possible to make a limited agreement not to indulge in that kind of testing, without the necessity of verification on the spot?

The Prime Minister: That does not arise out of the Question, which deals with nuclear testing. If there is a special Question on 'high-altitude tests, as no doubt there may be, I will do my best to answer it.

Oral Answers to Questions — TRADE AND COMMERCE

Motor Industry Electrical Accessories (Report)

Mr. Leather: asked the President of the Board of Trade when he expects the report from the Monopolies Commission on their investigation into the motor industry electrical accessories trade.

The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson): I understand that the Commission hopes to be able to submit this report before the end of the year.

Mr. Leather: While thanking my hon. Friend for that bit of encouragement, may I ask whether he does not agree that it is most unsatisfactory that any position like this can be allowed to drag on for over five years? Does it not mean that if there is a monopoly position it has been allowed to go on with the Government's connivance unchecked all this time and that whatever evidence is collected now is likely to be completely in contradiction to that collected five years ago, because the situation has completely altered? Is not this a most unsatisfactory position?

Mr. Macpherson: I do not think that it could be denied that the situation may have altered since the inquiry started, but the inquiry has kept up with the changes as they have come along. My hon. Friend will know that the inquiry has extended into eight different classes of equipment and has been a very complex and technical one.

Mr. Leather: Does not this indicate that the Government have not the tools to do the kind of job which in the national interest we all want them to do? Could not my hon. Friend take powers to give himself the people, the bodies and the equipment to get on with the job quickly and efficiently?

Mr. Macpherson: We are investigating this matter at present, but we have to establish the truth. The truth in so complex a matter may take a long time to establish, no matter how large the organisation we may have to establish it.

Sir C. Osborne: Is my hon. Friend aware that the fact that these negotiations have taken five years supports the feeling that somehow the Government are not in real earnest to get to the bottom of all this? Although that feeling may not be justified by the facts, is my hon. Friend aware that the Government have accused themselves by being so dilatory in doing the work? Why cannot they get on with it?

Mr. Macpherson: That is certainly not justified by the facts. It is not the Government who are inquiring but the Monopolies Commission. My right hon. Friend the President of the Board of Trade is not responsible for the conduct of the inquiry. Once a matter has been referred to the Commission, it is the Commission's responsibility to decide on its handling.

Dairy Products (Imports)

Mr. P. Browne: asked the President of the Board of Trade if he will curtail the imports of dairy products from countries outside the Commonwealth, in view of the fact that these imports continue to rise as a percentage of total available supplies from both home and Commonwealth sources;and if he will make a statement.

The Minister of State, Board of Trade (Sir Keith Joseph): No, Sir. In any case, my right hon. Friend is-not aware that imports of such products from countries outside the Commonwealth are increasing as a proportion of total supplies.

Mr. Browne: Is my hon. Friend aware that over the past seven years this home market has absorbed an extra 1,000 mil-

lion gallons of milk equivalent? Is he aware that 67 per cent. of the extra quantities used has come from abroad but that of that 67 per cent. only 38·5 per cent. has come from the Commonwealth? Is he aware that this is a trend which is rising? Is my hon. Friend further aware that his Department took no notice of dumped products from France last summer? Does he think that this sort of policy—if it can be called a policy —is in the interest of the farmer, the taxpayer or the Commonwealth?

Sir K. Joseph: Each case about dumping is dealt with on its merits. We are the main market for the Commonwealth's agricultural exports, in most cases, and provided that our farmers are assured of a reasonable standard of living it is greatly to the interests of the country, as a major trading nation, and to us all as consumers, and to the balance of payments, that there should be the freest possible imports of food supplies.

Mr. Prior: Is my hon. Friend aware that dumping of dried milk is going on at the moment, and that the only reason that the Milk Marketing Board has not put in an application is that it is so disgusted with its treatment last year that it has decided not to put in an application this year?

Sir K. Joseph: That is a different question, but an analysis of the number of cases in which dumping applications have been successful should leave those who wish to apply perfectly satisfied with the treatment they get.

HOUSE OF COMMONS ACCOMMODATION (AD HOC COMMITTEE)

Mr. Speaker: I have a statement to make to the House.
In accordance with the recommendation made to me in the Answer of the Leader of the House to a question from the hon. Member for South Angus (Sir J. Duncan) on 18th April this year, I propose to appoint an ad hoc Committee with the terms of reference following, namely:
To consider and recommend how best an area of approximately 40,000 sq. ft. on the Bridge Street site might be used for permanent accommodation for the purposes of the House of Commons.


The following hon. Members have agreed to serve on the Committee: the hon. Member for South Angus (Sir J. Duncan) as Chairman, and the hon. Members for East Grinstead (Mrs. Emmet);Bradford, West (Mr. Tiley);Truro (Mr. G. Wilson);Southend, West (Mr. Channon);Blackburn (Mrs. Castle);Leeds, West (Mr. C. Pannell);Stalybridge and Hyde (Mr. Blackburn);and the hon. and learned Member for Cardigan (Mr. Bowen).

Mr. C. Pannell: Mr. Speaker, may I ask you a question arising from that statement?

Mr. Speaker: Yes.

Mr. Pannell: While I am very happy to serve on any Committee that you set up, Sir., I did understand, in the course of the arguments between the usual channels, that the terms of reference of this Committee were to he somewhat wider, and would take cognisance not only of the dim and distant future of the other side of the road, but of the day-to-day affairs of the House, including the prospective building we have in mind up top "here. I do not know whether I am right in asking you, Mr. Speaker, or whether I should ask the Leader of the House, whether the terms of reference could not be reconsidered.

Mr. Speaker: All I am trying to do is to follow what I thought was the agreed view of the House. In those circumstances, it is probably best that that question should be addressed to the Minister. I thought that those were agreed terms of reference.

Mr. S. Silverman: I hear references made to the agreed opinion of the House and to the discussions that have taken place through the usual channels. For the benefit of those who do not participate in those communications, may we know what this is all about, Mr. Speaker?

Mr. Speaker: Mr. SpeakerI do not know whether it would, perhaps, help the hon. Member for Nelson and Colne (Mr. S. Silverman) to read in HANSARD what I said, but I think that the statement makes plain what it is about. If it did not, I am sorry. But if there is a difficulty about it in some way, I should be grateful if the hon. Gentleman would address his

question to the Leader of the House, because I am slightly crippled by my office for dealing with the matter otherwise.

Mrs. Castle: You said, Mr. Speaker, that it would be appropriate for us to address our questions to the Minister, and I assume that you mean the Leader of the House. If so, would this be the time to do so? As this is the moment of the announcement, and as some hon. Members on this side have been to see the Leader of the House and have put to him a very strong case for the widening of the terms of reference of the Committee, in the interests of all hon. Members who have many day-to-day problems of accommodation, which were previously dealt with by the Advisory Committee which had the honour of serving you, Sir—and, I think, serving you with considerable effectiveness—may I take this opportunity to ask a question of the Leader of the House now?

Mr. Speaker: I dismiss anybody's idea that I am not intensely grateful for the services of the hon. Lady and other hon. Members on that Committee last year. Listening to this discussion, it seems to me that there is rather more to it than can be dealt with on a wholly irregular basis. I think that a question on another occasion would be more appropriate, because we cannot debate the revision of the terms of reference now with much grace.

The Chancellor of the Duchy of Lancaster (Mr. fain Macleod): Perhaps it would be appropriate for me, Mr. Speaker, to say just a sentence or two about this matter.
As I understand the position, what you have just announced to the House carries out the announcement made on 18th April. I think that we all want to get advice, whatever the future Accommodation Committee may be, on the question of the Bridge Street site. With that, I think everybody is agreed. I therefore thought that it appropriate not to take any action in the matter by way of response to the hon. Members concerned until you, Mr. Speaker, had made that announcement.
Now that the announcement has been made, perhaps I might communicate with the hon. Members on the wider questions that they have raised.

INDUSTRIAL ESTATES MANAGEMENT CORPORATIONS

3.35 p.m.

Mr. William Hamilton: I beg to move,
That leave be given to bring in a Bill to empower Industrial Estates Management Corporations to establish industries in development districts.
At the last General Election, the Conservative Party made a great song and dance about how it would cure the unemployment which its own policies had created. We were told during the course of the election campaign that the Bill to deal with that problem was already drafted. Sure enough, immediately after the election, we got the Measure which is now the Local Employment Act, which has been operative since April, 1960. The purpose of that Act, as was made quite plain by the President of the Board of Trade and other Ministers, was to provide what they called a flexible instrument with which to tackle local pockets of unemployment by providing industry with inducements of one kind and another to go into such areas.
The present Secretary of State for the Colonies, who was then President of the Board of Trade, said, during the Third Reading debate:
The real thing that we are concerned about;Is the creation of employment "—[OFFICIAL REPORT, 3rd February 1960;Vol. 616, c. 1179.]
Hon. Members should note those words, "the creation of employment".
The hon. Member for Sevenoaks (Mr. J. Rodgers), then Parliamentary Secretary to the Board of Trade, said in the same debate that the Bill
…meets the social and human needs of the community and what is perhaps the most important problem a man can face, that of having a livelihood which will give him both security and dignity."—[OFFICIAL REPORT, 3rd February, 1960;Vol. 616, c. 1135.]
I must add that those sentiments are a very far cry from those expressed by the hon. Member for Poole (Sir Richard Pilkington), who suggested at Question Time the other day that Scotland might be treated as a colony—we might get much more generous treatment if we were—and are also alien to the views of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) —the man born with a silver teapot in his mouth—who suggested that young

men in Scotland were unemployed because they were waxing fat on the dole. I suggest that he might pay a visit to the West Lothian by-election in due course and make the same kind of remark.
Let us compare the achievement with the promise. In an Answer I received in the House last week it was stated that the number of new jobs created in Scotland in the last five years was 51,200 and that the number of jobs lost in the same period was 85,150. During the two years of the effective operation of the Local Employment Act —and this information was given in the same Answer —we find that 23,250 jobs were lost and 33,500 created, a net gain of 10,250.
I received an Answer yesterday stating that in the first quarter of this year about another 5,000 jobs had been lost. In other words, ignoring yesterday's Answer, we have had a net gain in the two years of the operation of the Local Employment Act in Scotland of 10,250 jobs, or about 5,000 a year.
The Parliamentary Secretary to the Ministry of Labour said in Fife a few weeks ago that West Fife alone needed 5,000 new jobs. This is not taking into account the 25,000 people who leave Scotland each year because of the lack of employment opportunities. The Toothill Committee examined this problem and, knowing about the major motor car undertakings that are now coming into effect in Scotland, concluded:
Even with the recent and notable successes in bringing major undertakings to Scotland it is unlikely, unless new and vigorous moves are made, that there will be enough jobs in 1964.
My purpose in asking leave to introduce the Bill is to try to make one such move. The Act as it now stands provides that the management corporations are little more than estate managers—no doubt very necessary and worthwhile activities. The aim of the Bill is to extend the powers of the management corporations so far as to enable them to build and own their own factories and to start their own publicly-owned industries. The personnel of these corporations, I think we all agree, are well qualified to do this, for they are highly qualified and responsible men who would not embark on such a scheme unless they thought that it was a sound proposition.
I will give a few examples of what might be done. The National Research Development Corporation could be enlarged and reconstructed and could use the management corporations as its agents in setting up productive units and exploiting the fruits of what is, after all, Government-financed research, either in competition with private enterprise, or, if need be, in co-operation with it. My second example concerns the Forestry Commission, again a Government-financed undertaking which is now being profitably established in Scotland, particularly in some areas which are finding it extremely difficult to get alternative industry.
I believe that if the Forestry Commission co-operated with the management corporations to build, own and operate their own small chipboard factories, and so on, in Scotland this would do a great deal to alleviate some of the problems in the extreme North and isolated parts. My third example concerns the National Health Service, again financed entirely by public funds. One of the greatest scandals in the Health Service is the profiteering in drugs which are often marketed after inadequate clinical testing. There is considerable scope here for using the management corporation as the Government's agents for the production of not only drugs, but other National Health Service requirements.
There is great scope in this direction in two ways. First, for increasing the employment facilities in hard-hit areas like the development districts which are scheduled under the Act. Secondly, in reducing the costs of the National Health Service by cutting out the private profit interests that are so much involved at the moment.
My fourth example concerns the oil refining plant at Grangemouth. The Parliamentary Secretary to the Board of Trade knows well that many of the byproducts from that concern are sent to England and even overseas to be manufactured. Private enterprise in Scotland is clearly not interested in manufacturing them on the spot, so why should not the management corporations, under the Local Employment Act, be empowered to step in? I have given these four example—and there are many more—to show what could be done. I hope that the Government will think them to be constructive suggestions—certainly

better than anything so far suggested by the Government.
It is in that spirit, of wishing to help the Government to fulfil their election pledges, that I beg to ask leave to introduce the Bill.

3.46 p.m.

Mr. Ian MacArthur: The proposed Bill of the hon. Member for Fife, West (Mr. W. Hamilton) concerns the rôle of the industrial estates management corporations which were set up under the Local Employment Act, 1960. The Measure would extend the function of these corporations beyond the role which they fill today;that is, it would extend their function from that of factory building and management agents to that of manufacturers. This goes far beyond the intention of the Act and I hope that the House will reject the Motion.
Hon. Members know of the unemployment there is in many parts of Scotland. They also know of the new industries and new employment coming to Scotland—achievements which are so often decried by hon. Gentlemen opposite. Of course, it is true that many jobs have been lost in industries that are declining or contracting, but it is equally true that many new jobs are being created in new industries with a real potential for growth. We have only to think of the new motor industry, which is not only providing new employment in itself, but from which large new satellite industries will spring if Scotland has the will to look forward and seize these opportunities.
The Local Employment Act gave positive encouragement to expanding industries on both sides of the Border to extend into the scheduled areas in Scotland. Indeed, well over half of the total aid under the Act since it came into force has been in Scotland. I believe that the true feelings of the people of Scotland are better expressed by pointing to those sections of our economy that are growing than by continually emphasising, to the exclusion of all else, those parts that are in decline.
Hon. Gentlemen opposite are constant and destructive in their criticism.

Mr. E. G. Willis: Mr. E. G. Willis(Edinburgh, East), The proposed Bill is constructive.

Mr. MacArthur: They may consider constant and destructive criticism to be


the function of the Opposition. It is reasonable, therefore, that we should ask what measures they, who failed to remedy the position in their six years of office, would seek to introduce to improve on the Local Employment Act.

Mr. Willis: We are telling the hon. Member.

Mr. MacArthur: The hon. Member for Fife, West, who often speaks for the Opposition in these matters, has rediscovered nationalisation. Just as nationalisation was put forward as the cure for all ills in 1945, so State industries are put forward today. As the hon. Gentleman has shown, it would be relatively easy to extend the statutory powers of the existing management corporations so that they could set up and operate industries of their own, financed and controlled by the State.
I suggest that there are several good reasons for rejecting the hon. Gentleman's proposal. First, it is contrary to Government policy, because it would introduce nationalisation by the side door. It may be thought that the effect would be small and reasonable in view of the latest chameleon change in Socialist policy which excludes I.C.I. from the next programme of nationalisation, at any rate until the forthcoming by-elections are well out of the way. But the hon. Gentleman's proposal is, in fact, the thick end of the wedge, because it would apply to no less than 1,000 factories whose freeholds are owned by the Board of Trade and which are leased by the industrial estate management corporations to private industries.
Secondly, what would these State factories produce? The hon. Gentleman has given several examples. He referred to forestry. Perhaps he is not aware of the new pulp mill to be established near Fort William, thanks largely to the Local Employment Act. He referred to drugs;we have heard all that before. He also spoke of the National Research Development Corporation and suggested that State fac

Division No. 203.]
AYES
[3.54 p.m.


Abse, Leo
Bennett, J. (Glasgow, Bridgeton)
Bowles, Frank


Ainsley, William
Benson, Sir George
Boyden, James


Albu, Austen
Blackburn, F.
Brockway, A. Fenner


Allen, Scholefield (Crewe)
Blyton, William
Broughton, Dr. A. D. D.


Awbery, Stan
Boardman, H.
Brown, Rt. Hon. George (Belper)


Bellenger, Rt. Hon. F. J.
Bowden, Rt. Hn. H. W.(Leics, S.W.)
Brown, Thomas Ince)

tories could take on and exploit inventions developed by the Corporation. The Corporation already develops inventions to the stage at which they can be commercially exploited by the owners of development contracts with firms which the Corporation considers best suited for the work. The Corporation already has powers under existing legislation to carry out projects entailing the manufacture of goods. There is, therefore, nothing new in the hon. Gentleman's proposal. Surely it is right that the Corporation should also be free, as it is at present, to place contracts with existing and established and capable firms which it considers most suitable to undertake the work.

The hon. Gentleman gave four examples. I doubt whether he, or any other Socialist, would stop there. The powers which he seeks would apply to all of the 1,000 or more factories owned by the Board of Trade. What would he have them all make? Most industries are already represented in the development districts and many of them have spare capacity. There would be no purpose in setting up State industries to compete with existing industries which are unable at present to work to full capacity. Such a course would simply aggravate local problems.

Hon. Members opposite sometimes forget that there is no use in production in the end unless the product can be sold. No doubt the State could continue to run factories at a loss longer than anyone else, because the State has the taxpayers' resources to fall back on. I suggest that this is not the way to build a prosperous Scotland in a competitive world. The proposed Bill is an attempt to introduce Socialist nationalisation in a new guise, and I ask the House to reject the Motion.

Question put, pursuant to Standing Order No. 12 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—

The House divided Noes 229.

Butler, Herbert (Hackney, C.)
Hughes, Cledwyn (Anglesey)
Probert, Arthur


Butler, Mrs. Joyce (Wood Green)
Hughes, Emrys (S. Ayrshire)
Proctor, W. T.


Callahan, James
Hunter, A. E.
Randall, Harry


Castle, Mrs. Barbara
Irving, Sydney (Dartford)
Rankin, John


Collick, Percy
Jay, Rt. Hon. Douglas
Redhead, E. C.


Craddock, George (Bradford, S.)
Jeger, George
Reynolds, G. W.


Cullen, Mrs. Alice
Jenkins, Roy (Stechford)
Rhodes, H.


Darling, George
Johnson, Carol (Lewisham, S.)
Roberts, Albert (Normanton)


Davies, C. Elfed (Rhondda, E.)
Jones, Dan (Burnley)
Robertson, John (Paisley)


Davies, Harold (Leek)
Kelley, Richard
Robinson, Kenneth (St. Pancras, N.)


Davies, S. O. (Merthyr)
Kenyon, Clifford
Rodgers, W. T. (Stockton)


Deer, George
Key, Rt. Hon. C. W.
Rogers, G. H. R. (Kensington, N.)


Delargy, Hugh
Lawson, George
Ross, William


Diamond, John
Lee, Frederick (Newton)
Royle, Charles (Salford, West)


Dodds, Norman
Lee, Miss Jennie (Cannock)
Shinwell, Rt. Hon. E.


Ede, Rt. Hon. C.
Lewis, Arthur (West Ham, N.)
Silverman, Julius (Aston)


Edwards, Rt. Hon. Ness (Caerphilly)
Lipton, Marcus
Silverman, Sydney (Nelson)


Edwards, Robert (Bilston)
Loughlin, Charles
Skeffington, Arthur


Edwards, Walter (Stepney)
MacDermot, Niall
Slater, Mrs. Harriet (Stoke, N.)


Evans, Albert
McInnes, James
Slater, Joseph (Sedgefield)


Finch, Harold
McKay, John (Wallsend)
Snow, Julian


Fitch, Alan
McLeavy, Frank
Sorensen, R. W.


Fletcher, Eric
MacMillan, Malcolm (Western Isles)
Spriggs, Leslie


Foot, Dingle (Ipswich)
Mallalieu, J.P.W. (Huddersfield, E.)
Steele, Thomas


Foot, Michael (Ebbw Vale)
Manuel, Archie
stonehouse, John


Forman, J. C.
Mason, Roy
Stones, William


Fraser, Thomas (Hamilton)
Mayhew, Christopher
StraChey, Rt. Hon. John


Galpern, Sir Myer
Mellish, R. J.
Strauss, Rt. Hn. G. R. (Vauxhall)


Ginsburg, David
Mendelson, J. J.
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Gooch, E. G.
Millan, Bruce
Taylor, Bernard (Mansfield)


Gourlay, Harry
Milne, Edward
Thomson, G. M. (Dundee, E.)


Grey, Charles
Monslow, Walter
Thornton, Ernest


Griffiths, David (Rother Valley)
Moyle, Arthur
Timmons, John


Griffiths, Rt. Hon. James (Llanelly)
Mulley, Frederick
Tomney, Frank


Griffiths, W. (Exchange)
Oliver, G. H.
WainWright, Edwin


Hale, Leslie (Oldham, W.)
Oram, A. E.
Warbey, William


Hall Rt. Hn. Glenvil (Colne Valley)
Owen, Will
Watkins, Tudor


Harper, Joseph
Pannell, Charles (Leeds, W.)
Weitzman, David


Hart, Mrs. Judith
Parker, John
Wells, Percy (Faversham)


Hay man, F. H.
Parkin, B. T.
Williams, Li (Abertillery)


Healey, Denis
Paton, John
Williams, W. T. (Warrington)


Henderson, Rt. Hn. Arthur (RwlyRegis)
Pavitt, Laurence
Wilson, Rt. Hon. Harold (Huyton)


Holman, Percy
Pearson, Arthur (Pontypridd)
Woodburn, Rt. Hon. A.


Houghton, Douglas
Peart, Frederick
Woof, Robert


Howell, Charles A. (Perry Barr)
Pentland, Norman
Yates, Victor (Ladywood)


Howell, Denis (Small Heath)
Plummer, Sir Leslie



Hoy, James H.
Price, J. T. (Westhoughton)
TELLERS FOR THE AYES:




Mr. Willis and Mr. W. Hamilton.




NOES


Agnew, Sir Peter
Clark, William (Nottingham, S.)
Freeth, Denzil


Allan, Robert (Paddington, S.)
Clarke, Brig. Terence (Portsmth, W.)
Galbraith, Hon. T. G. D.


Allason, James
Cleaver, Leonard
Gilmour, Sir John


Barber, Anthony
Cooke, Robert
Glyn, Sir Richard (Dorset, N.)


Barlow, Sir John
Cordeaux, Lt.-Col. J. K.
Goodhew, Victor


Barter, John
Cordle, John
Gower, Raymond


Batsford, Brian
Corfield, F. V.
Grant, Rt. Hon. William


Beamish, Col. Sir Tufton
Costain, A. P.
Grant-Ferris, Wg. Cdr. R.


Bell, Ronald
Couison, Michael
Green, Alan


Bevins, Rt. Hon. Reginald
Courtney, Cdr. Anthony
Grimond, Rt. Hon. J.


Biffen, John
Craddock, Sir Beresford
Hall, John (Wycombe)


Biggs-Davison, John
Crosthwaite-Eyre, Col. Sir Oliver
Hamilton, Michael (Wellingborough)


Birch, Rt. Hon. Nigel
Cunningham, Knox
Harris, Frederic (Croydon, N.W.)


Black, Sir Cyril
Dalkeith, Earl of
Harris, Reader (Heston)


Bourne-Arton, A.
Dance, James
Harrison, Brian (Maldon)


Box, Ronald
d'Avigdor-Goldsmid, Sir Henry
Harrison, Col. Sir Harwood (Eye)


Boyd-Carpenter, Rt. Hon. J.
Deedes, W. F.
Harvey, Sir Arthur Vere (Macclesf'd)


Braine, Bernard
Donaldson, Cmdr. C. E. M.
Harvie Anderson, Miss


Brewis, John
Doughty, Charles
Hay, John


Bromley-Davenport, Lt.-Col. SirWalter
Drayson, G. B.
Heald, Rt. Hon. Sir Lionel


Brooke, Rt. Hon. Henry
du Cann, Edward
Hill, Dr. Rt. Hon. Charles (Luton)


Brooman-White, R.
Duncan, Sir James
Hill, Mrs. Eveline (Wythenshawe)


Brown, Alan (Tottenham)
Eden, John
Hill, J. E. B. (S. Norfolk)


Browne, Percy (Torrington)
Elliott, R. w (Nwcastle-upon-Tyne, N.)
Hobson, Sir John


Bullard, Denys
Emmet, Hon. Mrs. Evelyn
Hocking, Philip N.


Bullus, Wing Commander Eric
Errington, Sir Eric
Holland, Philip


Burden, F. A.
Erroll, Rt. Hon. F. J.
Hollingworth, John


Campbell, Gordon (Moray &amp;Nairn)
Farey-Jones, F. W.
Hope, Rt. Hon. Lord John


Cary, Sir Robert
Farr, John
Hopkins, Alan


Channon, H. P. G.
Finlay, Graeme
Hornby, R. P.


Chataway, Christopher
Fisher, Nigel
Howard, Hon. G. R. (St. Ives)


Chichester-Clark, R.
Fletcher-Cooke, Charies
Hughes Hallett, Vice-Admiral John


Churchill, Rt. Hon. Sir Winston
Fraser, Hn. Hugh (Stafford A Stone)
Hughes-Young, Michael


Clark, Henry (Antrim, N.)
Fraser, lan (Plymouth, Sutton)
Hulbert, Sir Norman

Hurd, Sir Anthony
Mills, Stratton
Smith, Dudley (Br'ntf'd &amp;Chiswick


Hutchison, Michael Clark
Miscampbell, Norman
Smyth, Brig. Sir John (Norwood)


Iremonger, T, L.
More, Jasper (Ludlow)
Spearman, Sir Alexander


Irvine, Bryant Godman (Rye)
Morrison, John
Stanley, Hon. Richard


Jenkins, Robert (Dulwich)
Mott-Radclyffe, sir Charles
Stevens, Geoffrey


Jennings, J. C.
Nabarro, Gerald
Steward, Harold (Stockport, S.)


Johnson, Dr. Donald (Carlisle)
Nicholls, Sir Harmar
Stodart, J. A.


Johnson, Eric (Blackley)
Nicholson, Sir Godfrey
Stoddart-Scott, Col. Sir Malcolm


Johnson Smith, Geoffrey
Noble, Michael
Storey, Sir Samuel


Joseph, Sir Keith
Nugent, Rt. Hon. Sir Richard
Studholme, Sir Henry


Kaberry, Sir Donald
Oakshott, Sir Hendrie
Tapsell, Peter


Kimball, Marcus
Orr, Capt. L. P. S.
Taylor, Sir Charles (Eastbourne)


Lagden, Godfrey
Osborn, John (Hallam)
Taylor, Frank (M'ch'st'r, Moss Side


Lambton, Viscount
Osborne, Sir Cyril (Louth)
Taylor, W. J. (Bradford, N.)


Lancaster, Col. C. G.
Page, John (Harrow, West)
Teeling, Sir William


Langford-Holt, Sir John
Pannell, Norman (Kirkdale)
Temple, John M.


Leather, E. H. C.
Pearson, Frank (Clitheroe)
Thatcher, Mrs. Margaret


Leavey, J. A.
Peel, John
Thomas, Leslie (Canterbury)


Leburn, Gilmour
Pickthorn, Sir Kenneth
Thomas, Peter (Conway)


Lewis, Kenneth (Rutland)
Pike, Miss Mervyn
Thompson, Kenneth (Walton)


Litchfield, Capt. John
Pilkington, Sir Richard
Tiley, Arthur (Bradford, W.)


Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Powell, Rt. Hen. J. Enoch
Touche, Rt. Hon. Sir Gordon


Lloyd, Rt. Hon. Selwyn (Wirral)
Prior, J. M. L.
Turner, Colin


Loveys, Walter H.
Prior-Palmer, Brig. Sir Otho
Turton, Rt. Hon. R. H.


Lubbock, Eric
Profumo, Rt. Hon. John
van Straubenzee, W. R.


Lucas-Tooth, Sir Hugh
Proudfoot, Wilfred
Vickers, Miss Joan


McAdden, Stephen
Pym, Francis
Vosper, Rt. Hon. Dennis


McLaren, Martin
Quennell, Miss J. M.
Wade, Donald


McLaughlin, Mrs. Patricia
Redmayne, Rt. Hon. Martin
Wakefield, Sir Wavell


Maclay, Rt. Hon. John
Rees, Hugh
Walker, Peter


Maclean, Sir Fitzroy (Bute&amp;N.Ayrs.)
Renton, David
Ward, Dame lrene


Macleod, Rt. Hn. lain (Enfield, W.)
Ridley, Hon. Nicholas
Wells, John (Maidstone)


Macmillan, Maurice (Halifax)
Ridsdale, Julian
Whitelaw, William


Macpherson, Niall (Dumfries)
Robertson, Sir D. (C'thn's &amp;S'th'ld)
Williams, Dudley (Exeter)


Maddan, Martin
Robinson, Rt. Hn. Sir R. (B'pool, S.)
Wills, Sir Gerald (Bridgwater)


Maitland, Sir John
Robson Brown, Sir William
Wilson, Geoffrey (Truro)


Manningham-Buller, Rt. Hn. Sir R,
Rodgers, John (Sevenoaks)
Wolrige-Gordon, Patrick


Markham, Major Sir Frank
Roots, William
Worsley, Marcus


Marshall, Douglas
Russell, Ronald
Yates, William (The Wrekin)


Marten, Neil
Scott-Hopkins, James



Mathew, Robert (Honiton)
Seymour, Leslie
TELLERS FOR THE NOES:


Matthews, Gordon (Meriden)
Sharples, Richard
Mr. N. McLean and


Maxwell-Hyslop, R. J.
Shaw, M.
Mr. MacArthur.


Maydon, Lt.-Cmdr. S. L. C.
Skeet, T. H. H.

Orders of the Day — FINANCE BILL

Considered in Committee [Progress 23rd May]

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

New Clause—(INCOME TAX AND PROFITS TAX (PENALTIES AND ASSESSMENTS).)

(1) Part III of the Finance Act, 1960 (which relates to income tax and profits tax penalties and assessments), shall be construed as having, from the commencement of that Act, the like effect in relation to happenings before that commencement as it has in relation to happenings after that commencement, except as specifically provided by any enactment contained in the said Part III (including the Seventh Schedule to the Act);and where any enactment so contained makes use of words in the present tense or in a past tense, that use shall not be taken to have any reference to the commencement of the Act or to import any distinction between happenings before and happenings after that commencement.

In this subsection "happening" includes any act or omission.

(2) In subsection (2) of section forty-four of the Finance Act, 1960 (which contains savings by reference to proceedings commenced before the commencement of that Act), "proceedings" shall be construed as referring only to proceedings for the recovery of a penalty under the Income Tax Acts or the enactments relating to the profits tax.

(3) This section shall be deemed to have had effect as from the commencement of the Finance Act, 1960, but not so as to make interest payable under section fifty-eight of that Act on any tax as respects which a certificate under subsection (5) of that section was refused before the passing of this Act. —[The Attorney-General.]

Brought up, and read the First time.

4.4 p.m.

The Attorney-General (Sir Reginald Manningham-Buller): I beg to move, That the Clause be read a Second time.
During my speech on Second Reading, I said that we would introduce this Clause in order to counteract the consequences of the decision of the divisional court in the case of ex parte Fysh, which was given after the Budget debate. I reminded the House then of the criticisms made in the court of the penalties and provisions that were contained in the Finance Act, 1960. They were also criticised by the Royal Com-

mission and I need not discuss them in detail.
Suffice it to say that it was open to the Inland Revenue to sue for £20 plus three times the taxpayer's total liability to tax for a particular year, if the taxpayer failed to make a true and correct return. That kind of penalty, under the old law, was criticised as harsh and unconscionable. It is right that I should point out, however, that there was little criticism of the way in which the Revenue used this extensive power. It was open to it to accept far less than the full pound of flesh to which it was entitled by the Statute. In practice, the Revenue used these penalty provisions for recovery of all tax which the taxpayer should have paid and of interest on the amount outstanding, and for the recovery of such penalties in addition as it thought appropriate.
The Committee will remember that in 1960 we introduced a new code which, I think, met with the approval of all right hon. and hon. Members. Under it, provision was made for the raising of assessments to recover the tax which ought to have been paid and had not been paid, for the charging of simple interest at 3 per cent. on tax recovered, and for the Revenue to sue in the court for penalties appropriate to the taxpayer's misconduct, it being for the court to decide what was the appropriate penalty within the prescribed limit.
The intention of the House was that this new code should apply after 1960 to all cases, whether or not the tax default occurred before or after 1960 and whether or not the default was discovered before 1960. There was only one exception. We did not intend to interfere with penalty proceedings already started under the old law, but we intended that any new proceedings for a penalty should be under the 1960 Act. That Act was, in a sense, retrospective in this respect. It was intended to be retrospective for the benefit of the taxpayer. It would, indeed, have been unfair to have allowed the old harsh code to continue to apply to offences committed in the years before 1960 while prescribing a fairer code in relation to misconduct since then.
On 18th April, the divisional court held, in the case of Fysh, that because


the provision in the 1960 Act imposing a charge of interest on unpaid tax was in the present tense, interest could not be charged on tax assessed before the Act came into force. In the light of this decision, it could be argued that the new penalty provisions applied only to defaults committed after the passage of the 1960 Act and that the old harsh penalty provisions applied not only where penalty proceedings had been instituted before 1960, but also where other steps had been taken before that time.
Subsection (1) of the Clause makes it clear that the 1960 code applies to happenings before as well as after the commencement of the 1960 Act and that this is to be so despite the use of the present tense in certain sections of that part of the Act. Subsection (2) makes it clear that the old code of penalty proceedings applies only where penalty proceedings were started before the 1960 Act. Subsection (3) makes it clear that this Clause, while retrospective—as was the 1960 Act—will not affect the decision in the case of Fysh and similar cases.
I may be asked why this Clause should be made retrospective, why it is not to have effect as from the commencement of the 1960 Act, and why it would not suffice to allow it to commence with this Bill. There are three compelling reasons for this course.
The first is that unless it is made retrospective back to 1960 the taxpayer, even though penalty proceedings under the old code have not yet been started, may be liable. I am confident that that was not the intention of Parliament in 1960. The second reason is that between 1960 and the decision in the Fysh case the Inland Revenue made many thousands of settlements with defaulting taxpayers involving over £30 million. These settlements were made on the basis, accepted by both sides, that the new code applied.
In the light of the Fysh case, claims may be made for the reopening of these settlements. Those claims might not succeed, but, if they did, the consequences to the Revenue might be serious. In many of these cases it might also be too late to undertake formal penalty proceedings, or even to assess tax, so that the defaulting taxpayer would get away with it without paying the tax he should have paid.
Furthermore, in some cases the Revenue has started penalty proceedings under the new code. If those proceedings had to be abandoned owing to expiry of the time limit, it might not be possible to start fresh ones. Again, the result would be that these defaulters would get away with it.
For these reasons, and because the passage of the Clause will have the effect of making the 1960 Act do what everyone intended it to do and what, until the decision in the Fysh case, it was generally thought to do to the advantage of the taxpayer, I commend the Clause to the Committee.

Mr. Eric Fletcher: I do not think that anyone on this side of the Committee would want to dissent from the fact that the Attorney-General is commending this new Clause to the House, but I think that it is pertinent to make two observations on his speech.
First, I gather from what the Attorney-General said that it is really a confession on his part that the 1960 Act was imperfectly drawn and that it was not drawn with sufficient clarity to give effect to what Parliament intended.

The Attorney-General: I certainly was not making any confession. I was informing the hon. Gentleman of the decision of the court in construing it.

Mr. Fletcher: It seems to follow from what the Attorney-General said that he and his advisers, in drafting the 1960 Act, had not effectively given operation to the intention of Parliament, because when the courts came to construe the Act of 1960 they placed a different interpretation on it from that which the Attorney-General and others on the Government Front Bench had intended.
As a result of that failure on the part of the Government to draft the Act properly, I think that we might have had, in addition to what the Attorney-General has said, some apology for that omission, and also I think that we are entitled to some assurance that sufficient care is being taken in this Finance Bill to ensure that the intentions of the Government are being properly carried out in legislative form. I think that we are at least entitled to that assurance.
Secondly, I think that it is reasonable to make this observation that, just in so far as the Government recognise that in


the 1960 Act it was perfectly legitimate to make certain provisions with retrospective effect and to amplify them in this Finance Bill by making them doubly retrospective, it is worth placing on record the fact that the Government recognise that there are cases in which legislation of a retrospective character in Finance Acts is not only perfectly legitimate in itself, but is in the interest both of the taxpayer and of the Revenue.
Finally, I think it right to ask the Attorney-General for this assurance: that in so far as proceedings may in the future be contemplated under the Finance Act, 1960, as we are now about to amend it, any taxpayer will be subject only to the penalties introduced into the 1960 Act by the Act of 1960 and nut be subject to the penalties in force before that Act was introduced.

The Attorney-General: I dealt with the last point raised by the hon. Gentleman the Member for Islington, East (Mr. Fletcher) in the course of my speech, when I made the position perfectly clear. As to the first point that he made, I think that perhaps he had in mind the observation that I made about this on Second Reading.
The 1960 Act was drafted with very great care. It made use of what I think the grammarians call the historic present tense, and that led to difficulty in the divisional court. As I said on Second Reading, one might well have an appeal from that decision, to a superior court, but in view of the fact that the Finance Bill was under consideration it was thought preferable to take this course. We always try to get the Finance Bill right, but instances occur from time to time where the courts put an interpretation on a particular Section which is different from that which the House intended. It is not infrequent for that position to be remedied in subsequent Finance Bills. That has been the experience of all Governments of all parties.

4.15 p.m.

Mr. David Weitzman: I have no doubt that the object of this new Clause is very good and important. However, we have had an example of the sort of decisions which the courts make and on the Government Front Bench we have three hon. and learned Gentlemen very

learned in the law. Is it not time that something was done to put this matter into simple, ordinary English? Finance Bills are getting beyond all argument and all reason. They are a field for argument by lawyers—I suppose that I should be the last to complain about that —and it is time that something was done about them.
I shall read to the Committee, because I think that it is important to put it on record, the wording of what is proposed. The new Clause states:
Part III of the Finance Act, 1960 (which relates to income tax and profits tax penalties and assessments), shall be construed as having, from the commencement of that Act, the like effect in relation to happenings before that commencement as it has in relation to happenings after that commencement, except as specifically provided by any enactment contained in the said Part III (including the Seventh Schedule to the Act);"—
it goes on:
and where any enactment so contained makes use of words in the present tense or in a past tense, that use shall not be taken to have any reference to the commencement of the Act or to import any distinction between happenings before and happenings after that commencement.
That is a jumble of words. Is it not time that something was done to simplify it?

The Attorney-General: I do not think that this provision deserves the criticism of the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman). I am quite sure that after reading it once, he understood it completely. It is never a matter of easy drafting to make a Statute say what everyone thought it did originally. As I said, a lot of the argument in the divisional court depended on the use of tenses—that is, in respect of the last passage which the hon. and learned Gentleman read.
There are two schools of thought about drafting. One is that one should cover every single possibility, in which case the language becomes rather complicated, and the other is to state quite clearly what is the purpose of the provision. I think that the provision in the 1960 Act comes in the latter category, because the whole of Part III was directed to saying what should happen under the new code. In the provision of Part III, dealing with the new code, the present tense was used and that led to the decision of the divisional court.

Mr. Weitzman: My criticism is that something should be done to simplify the whole matter and get Finance Bills put into proper shape so that ordinary people can understand them.

Mr. Ede: In his original explanation, the right hon. and learned Gentleman said that the first subsection which my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) quoted made something plain, and at another stage he said that it made it clear. All I wish to say—and I hope that the right hon. and learned Gentleman will take it as a compliment, as it is certainly intended—is that I accept that, but do so as an act of faith in the right hon. and learned Gentleman.

Question put and agreed to.

Clause read a Second time and added to the Bill.

New Clause.—(INCREASE OF PERSONAL RELIEFS.)

(1) In section two hundred and ten of the Act of 1952 (Personal relief) for the reference to two hundred and forty pounds there shall be substituted a reference to two hundred and fifty pounds and for the references to one hundred and forty pounds there shall be substituted references to one hundred and fifty pounds.

(2) This section shall not be deemed to have required any change in the amounts deducted or repaid under section one hundred and fifty-seven (Pay as you earn) of the Act of 1952 before the twenty-second day of June, nineteen hundred and sixty-two.—[Mr. Callaghan.]

Brought up, and read the First time.

Mr. James Callaghan: I beg to move, That the Clause be read a Second time.

The Chairman: It will be possible also to discuss with this Clause the new Clause—Increase of a personal relief —and the new Clause—Increase of relief in respect of children not over the age of eleven—and divide separately on the latter if that is necessary.

Mr. Callaghan: We hope that it will not be necessary to have a separate Division, Sir William, because we hope that the Government will accept the new Clause. It is with that gesture of faith, if I may repeat the words of my right hon. Friend the Member for South Shields (Mr. Ede), that I move the new

Clause. Two of the Clauses have a simple purpose—to increase the personal allowance for the single man and the married man by £10, and the third seeks to increase the child allowance by the modest sum of £10.
These proposed increases do not mark any feeling that this is necessarily the appropriate figure, but the Clauses do mark our dissatisfaction with the trend of the Government's taxation policies, especially over the last seven years. This move to increase personal allowances is yet another step in a campaign to harry and hound the Chancellor until he acknowledges that his predecessors and he himself in this Budget have acted unfairly towards P.A.Y.E. taxpayers. I have followed this theme through many of my speeches on the Finance Bill and I will continue to do so, because so far we have had no acknowledgement from the Chancellor, or any other Government spokesman, that the Government recognise that the small taxpayer, the P.A.Y.E. man, is getting an unfair deal.
I do not think that any hon. Member who looks at the figures can possibly disagree with that. In 1938-39, the personal allowance for a single man stood at £100. Now, twenty-three years later, it has been increased to only £140. The allowance for a married man was £180 in the year of the war and has now been increased to only £240, an increase of just one-third. The increase in the case of the single man is 40 per cent. There were variations in those years. but, broadly speaking, the personal allowances for the married man and the single man have been increased by only an insignificant sum since 1938–39.
The child allowance has a rather better history. There were steady increases right up to 1956–57, but since 1958–59, at any rate, those allowances have been stationary.
It might be argued that we cannot afford these increases, and if that is so we would not be entitled to make them. I have no doubt that the Chancellor will say that they cannot be afforded now. But it is no use picking these items out in isolation and saying that we cannot afford them unless we have first considered them in the context of all the Budgets over a period of years. It is with that backcloth that I say that the


Government have been treating the P.A.Y.E. man and the family man with a small income extremely unfairly.
The standard rate of Income Tax came down in 1959 and that cost the Chancellor £230 million. The famous or infamous Surtax is due to come down as from 1st January next, and that will cost about £83 million. I have no doubt that the Financial Secretary, who does not seem to be here at moment, will say "Ah, yes, but that was paid for by the increase in Profits Tax". In that way he will hope to wear a fig leaf to salve his conscience—but a fig leaf on the Financial Secretary is a rather indelicate subject and I will not pursue it further. But to regard the trend of Profits Tax over the last few years in that way is to get the whole trend of Government expenditure and budgeting out of context.
Profits Tax stood at 25 to 33 per cent. ranging between those two figures, right up to 1958. It was then reduced to 10 per cent. at a cost of scores of millions of pounds. It was then put up from 10 per cent, to 12½per cent and then to 15 per cent. I think that I am in order in referring to this, Sir William, because I am trying to show the Chancellor that if he had spent less and given fewer relies in that direction, he could have helped the married man and the single man, and the family man, the P.A.Y.E. taxpayer generally, much more than he has. What he has done is so to weight the scales of taxation that he has allowed the companies to have a high old time over the last few years. They have probably never had such a wonderful period of increased profits and lower taxation.
Although figures are a little tedious, I ought to put these figures on the record. In 1952–53, company profits were £2,450 million. In 1959–60, they were £3,470 million, so that company profits have increased by £1,000 million in less than ten years. But the annual taxation paid on those company profits has gone down by £48 million. One would normally expect that with a rise in income, profits would yield higher taxation revenue, but the reverse has been the case.
Because the Chancellor's financial policies have yielded less revenue to fortify his Budget at a time when companies have been even more prosperous than before, I say that company taxation

has escaped extremely lightly over the last few years as a result of the Government's deliberate financial policy. In 1952–53, company taxation was £815 million, whereas in 1959–60 it was £767 million. The income of companies was up by £1,000 million and their tax was down by 6 per cent.
Making the same comparisons for the Schedule E taxpayer, it will be seen that his income as gone up by 55 per cent. whereas his tax has gone up by nearly 100 per cent. Taking the two groups, companies, on the one hand, and individual taxpayers, on the other, it cannot be disputed that company taxation has gone down substantially and individual taxation has gone up. Although there is obviously a case for giving sufficient incentive to companies actively to invest in new plant and machinery—I shall be coming to that later—I might be less scathing if there were some evidence of that, but we know that not nearly enough has been done in that direction.
Companies have had a phenomenal increase in income over the last ten years, an income which has probably never been exceeded since the Companies Act was instituted one hundred years ago. Most of the profit has been distributed in dividends. I do not wish to go into that now, but the total distributed in dividends has gone up by hundreds of millions of pounds.
I make the contrast—at a time when companies have been more profitable than ever, the Government have so organised their Budgets that companies pay less tax and the P.A.Y.E. man pays more. I propose to continue this campaign throughout the year, if we get no satisfaction in the course of this Finance Bill, to compel the Chancellor, through the sheer force and weight of public opinion, so to alter his taxation policy that the married man and the single man with a small income get higher personal allowances out of which to be able to do at least something to pay for the increased cost of living which is bearing so heavily on them now.
4.30 p.m.
The £10 increase in the allowance that we propose is a token payment. It will cost a certain amount. Oddly enough—this is a feature that I do not like—it will cost much more in the Surtax part


of the range than at the lower end. The real difficulty from the Chancellor's point of view about putting up the personal allowance is that it will cost him a certain amount because he gives away not only Income Tax but also Surtax.
I should like him to investigate the possibility of having a cut-off for the personal allowances. I do not see why not. We have had no fuss in the past over the earned income relief. It was common form up to a few years ago always to have a cut-off at a certain level of income. [Interruption.] Earned income is by far the most important matter here. There are 20 million P.A.Y.E. taxpayers, and that is by far the most important aspect.
I wonder whether, to save a certain amount of revenue, and, in addition, to increase the amount of personal allowance relief where it really matters—at the point of the man earning £15 or £20 per week—the Chancellor would consider having a cut-off on the personal allowance. I wonder whether he has any figures to show how much he could save if he said, "I will increase the personal allowance up to £2,000 a year," or whatever figure he thinks appropriate. I do not see why we should not have this differential. I appreciate that the Inland Revenue will not like it, for it will mean additional work, and the Department is already very hard pressed. But that cannot always be the final consideration. The Chancellor must make arrangements to get the work done in whatever way Parliament thinks necessary.
I come back to the point that the Chancellor is not being fair to the P.A.Y.E. taxpayers. He is offsetting the relief of taxation on company profits, which has been extremely substantial, by increasing the total yield from the P.A.Y.E. taxpayers. It is high time this discrimination was corrected. I hope that the Chancellor will correct it today. If he does not, I can tell him that I shall pursue him and expose him on every possible occasion. I shall do my best to ensure that he is compelled by public opinion to help the P.A.Y.E. taxpayers in the next Budget.

Mr. Fletcher: I support what has been said by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan).

In the Finance Bill we have the one opportunity in the year to achieve some degree of financial justice between different classes of taxpayer. As my hon. Friend has said, as the law stands at present this is a montrous injustice to P.A.Y.E. taxpayers compared with other taxpayers.
My only comment on my hon. Friend's proposal is that I do not think that it goes far enough. It is very modest. It is merely that the personal allowance should be increased for a single man from £140 to £150 and for a married man from £240 to £250. I put it to the Chancellor that in view of all that has happened in recent years, in view of the reliefs given to Surtax payers, in view of the profits made by companies, I think that it is recognised generally that the single man and the married man with a family have been paying an undue burden of tax compared with other sections of the community. In view of the rise in the cost of living and the differentials which have been introduced in other spheres of taxation, it is quite absurd that the personal allowances should be left at the figures which have obtained during recent years.
The least that can be done to produce a degree of justice between the lower and the higher wage earners is to increase the personal allowances. I have not worked out what the proposal will cost the Treasury. I have no doubt that either the Chancellor or the Chief Secretary will be able to tell us. If the Chancellor says that the cost is more than he can afford in his overall Budget, then, as my hon. Friend has suggested, there are ways by which the gap can be reduced. There can be a cut-off. There can be differentials in respect of Surtax.
However, the fact that stands out preeminently in our fiscal legislation at present is that as the result of the Government's operations during their ten or eleven years in office the tax burdens of the lower income groups compared with the better-off sections of the community have increased disproportionately. An unfair proportion of taxation now falls upon those with low incomes as the result of the Government's policy. An obvious way to remedy that injustice is to increase the personal allowances. This measure is long overdue. It is


merited by every social consideration and every consideration of justice. I hope that we shall hear from the Chancellor that he is prepared to accept my hon. Friend's proposal.

Mr. Frank Tomney: Whoever the genius was in years gone by who thought of the P.A.Y.E. system, he deserves the congratulations and thanks of the nation, because what he did at one single stroke was to provide the Inland Revenue with a basis upon which the tax assessments covering a multitude of taxpayers—20 million—can be assessed from year to year almost in advance. There was a time under our tax law when the Inland Revenue used to ask people for their tax. Now it is taken from them.
The people to whom my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) referred are those who constitute the productive backbone of the nation's industry. This a modest request—I am surprised that it is couched in such modest terms—for an increase of £10 only. An increase is long overdue.
There are many factors bearing upon the people in this tax group. Many of them cannot be assessed in the ordinary way for tax purposes. There is the effect on them, for instance, of maintaining their children at school, and there is also the ever-increasing effect upon them of the cost of travel to work, for Which no taxation allowance or compensation is made. There is an added necessity for some consideration for these people. They are the people who, by their social content, provide the balance to the fiscal side of the nation, which is lacking in the 5 per cent. at the bottom of the scale, the people who are always trying to get something for nothing from the State, and the people at the top of the scale, who are prepared to grab all they can get.
I support the point made by my hon. Friend with regard to Profits Tax, and so on. If one has a private sector economy it is necessary to tax profits according to a schedule which will benefit industry. But it is also necessary to ensure that the persons who provide those profits receive common justice. In this way, the Chancellor has year after year fallen down in respect of these assessments. I have the greatest pleasure

in joining my hon. Friend in asking the Chancellor to accept his modest proposal.
Something must be done to counterbalance the ever-growing charges on a person's income against which he cannot Claim, but which, nevertheless, constitute a real burden to him and which, in the long run, represent an increasing demand upon him. Sometimes a man is unable to meet these demands in the strict sense. This burden should be shared a little more equally as between industry and the Treasury. The margin of profitability, particularly in marginal industries which are necessary in making exports, for capital turnover or providing employment should be shared equally and more fairly by tax concessions of this kind to the people who really need them.

Mr. Archie Manuel: I, too, have great pleasure in supporting the new Clause. I compliment my hon. Friends who put down this series of Clauses. We should thank my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) very much for the overwhelming case which he has made for greater personal relief for the lower income groups. My hon. Friend indicated clearly that there is unfairness in the allocation of relief under existing taxation procedures. I cannot imagine that the Chancellor of the Exchequer will find it easy to be firm and rocklike in resolving not to accept the principle enunciated by my hon. Friend.
We continually hear the plea that we will not get much further forward as a nation unless we do all we can to increase the output of our factories, to build more ships in our shipyards, and so on. The incentives so far provided by the Chancellor to achieve this expansion have been given at the wrong end of the income scale.
When the Surtax payers were afforded a further £83 million relief on 1st January, the only argument that we were given was that this would help exports and would make it worth while for people at those income levels to get a better return from industry through their directorships and salaries. We heard not a word about the importance of the man at the bench, the young fellow who wanted to provide a home


so that he could get marriedamp—the single man of whom my hon. Friend the Member for Cardiff, South-East spoke when claiming this meagre relief for which we ask. I agree that this is merely a token gesture to get the principle established.
My hon. Friend proved overwhelmingly that his case cannot be brushed aside. If it is said that taxation reliefs are dealt with fairly, the figures provided by my hon. Friend—showing the vast increase which has occurred in company profits and the smaller amount of Income Tax now paid by these companies, as against the far greater sums now being deducted from P.A.Y.E. payers—amply demonstrate that we have reached a time when something must be done concerning taxation reliefs.
We are continually being told that the major economic difficulties of the nation will be solved only with the help of those at the top end of the salary scales and by the companies which make vast profits, by appealing to them to obtain greater stability and to increase exports. There is, however, another side to the coin. The Chancellor must recognise the supreme connection in expansion between directorships and the young man at the bench—the young fellow who, for example, has served his apprenticeship, is earning his journey-manship and is starting to save to provide a home of his own. The token £10 additional relief to the classes indicated by my hon. Friend the Member for Cardiff, South-East should be gladly conceded by the Chancellor as an indication that the Government sincerely desire better relations in industry in augmenting exports.

4.45 p.m.

Mr. F. J. Bellenger: When the Chief Secretary replies, perhaps he will explain why the figures of £240 for married couples and £140 for single people ever appeared in a Finance Act. Do they represent the cost of married or single life? If they are token sums, I understand them.
I was a Member of the House before the Chief Secretary and I know the origin of P.A.Y.E. during the war. It was introduced, I believe, by Sir Kingsley Wood. I have nothing to say

about P.A.Y.E. except that it imposes upon employers the burden of collecting taxes for the Inland Revenue. That was an acceptable arrangement during the war, but I am not so sure that it is equally acceptable today. The imposition of this duty upon big employers means the payment of large sums of money in the expense of collecting these taxes, for which the Inland Revenue has to allow under Schedule D. I am more concerned, however, with the reason for the figures of £240 and £140.
My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) proposes what he calls a token increase of £10 in both cases. I do not consider that figure sufficient, but it all depends upon how one argues the case. If it is argued that the £240 and £140 are merely figures which a former or the present Chancellor regarded as giving, I was going to say a little bit of fat, but recognition that a man is married or single, I understand them. If, however, they are figures which represent the cost of married or single life, they are out of all proportion.
I have no doubt that acceptance of the new Clause would cost the Chancellor a lot of money. It is, however, a question of priorities. Therefore, when the Chief Secretary replies, he must indicate whether he considers that the whole line of allowances should be concentrated on the essence of life as we understand it, and particularly married life, in which I and, no doubt, the Chief Secretary are mainly concerned and in which we have to declare an interest.
We want from the Chief Secretary not the cost to the Inland Revenue of the £10 token increase, but an explanation of the Government's thinking in the granting of allowances to alleviate the burdens which come upon individuals who have to pay tax. Against that background we can judge the other new Clauses and assess whether the Government are doing their best, as in their propaganda they claim to have been doing, to alleviate the great burden of taxation upon individuals.

Mr. Percy Holman (Bethnal Green): Last year, by a similar new Clause, some of us pleaded with the Chancellor of the Exchequer to raise the allowance from £240 to ampamp£250 for married couples


on the ground that the cost of living had gone up approximately four points and that would leave them in exactly the same position as they were in twelve months' earlier. Since then the cost of living has gone up by a further five, nearly six, points. So the concession for which we are asking today is totally inadequate to represent the change in the value of money during the past two years. Today, £260 would barely be as much as £240 was two years ago.
In the fifteen years of my political life I have always believed that these personal allowances were meant to cover the basic elemental needs people have for food, a little for rent, a little for heating, but nothing much besides. On that basis, the allowances left as they are today affect very seriously the lower income groups. They do not affect Members of Parliament very much. What is an extra £10 or £50 allowance to those in the higher income groups? They materially affect the lower income groups, however, and certain groups of white-collar workers who find each year that the basic necessities are rising in price while their wages and salaries have not gone up proportionately with those of many other groups in industry, nor with the cost of living.
I know clerks who are seriously affected by the steady increase in prices while their increments are very much less than those increases. These little adjustments, as I call them, which, in our suggestion, would be totally inadequate today, ought to have amounted to at least £260 instead of £240. Nevertheless, this would be a gesture which would cost relatively little in a Budget which is almost self-supporting. The Chief Secretary should deal with this basic essential point which would materially help those in the greatest need.

Mr. Norman Dodds: I hope that the Government will show at long last that they are taking heed of the appeals made from this side of the Committee on behalf of the lower income groups. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) will be doing a public duty if he pursues relentlessly the path he has taken in these debates. For years the Government have been transferring wealth and the lower income

groups have been having a very bad time.
I hope that the Chief Secretary will show some appreciation of the work which is being put in by my hon. Friend. The proposals which he put forward were for only token personal reliefs. No one knows better than the Financial Secretary that the Government are in a terrible mess. Slowly but surely people throughout the length and breadth of the land—it matters not whether they are in industry or in agriculture—are realising this fact. I hope that the Minister's P.P.S. will be having a word with him about the growls and grumbles which are being heard because the Government seem to have no time whatever for the lower income groups. Here is a face-saver which would last at least for a week or so if these proposals were accepted.
I ask the Minister to take heed of the warnings given in the last week or two about the rapidly increasing cost of living, which will bear very heavily indeed on lower income groups. A few days ago Oxford University gave figures showing that a family of five with very moderate needs found that the cost of food had gone up on average by 6s. 7d. a week. If they accepted these proposals, the Government would show the people that they have some concern for those in the lower income groups as well as for those who are Surtax payers.
I ask not only that this new Clause should be accepted, but that some expresssion of gratitude should be made to my hon. Friend, because, although this would be only a token, it would indicate that we appreciate how, in a difficult period, the finances of the country have to be carefully watched but the lower income groups should be considered. I hope that there will be an expression of sympathy for the millions who are having a very difficult time.
If the Minister had seen the editorial in the Evening News on Monday night—and that paper is certainly not a supporter of the Labour Party—he would have seen that "the storm signals can be plainly seen" about the increasing cost of living. A writer in the newspaper said:" It gives me no pleasure to see Tory seats with 8,000 or 10,000 majorities being captured by the Liberals. Before


it is too late, will the Government wake up and help the ordinary people if they want their votes?"

The Chief Secretary to the Treasury and Paymaster-General (Mr. Henry Brooke): Probably the most helpful thing would be far me to state in the first instance some of the difficulties involved in this matter.
I was asked by the right hon. Member for Bassetlaw (Mr. Ballenger) what was the justification for fixing these personal allowances at any particular paint. The justification for this was not, as he perhaps suggested, that the figures of £140 or £240 were thought of by Governments as sums upon which a single person or a married couple could live. They are part of a complex system which is designed so to shade the amount of Income Tax at different income levels as to be fair throughout. The right hon. Member will appreciate that there are not only these personal allowances of which we are speaking, but also reduced rates of tax which operate for bands of income above the personal allowance level.
The amounts involved here, if the Committee were to accept this new Clause, would be, under new Clause 2 £34 million a year in respect of raising the £240 limit for a married couple to £250, £30 million a year in respect of raising the £140 for a single person to £150, and, in respect of new Clause 4 —which we are discussing at the same time—there would be another £20 million in a full year. That amounts to £84 million altogether. It would be quite impossible for my right hon. and learned Friend to contemplate a reduction of revenue of that character in this year when he has made clear in his Budget statement and throughout our Budget debates that this is not a year in which he considers, in view of the state of the national economy, that it would be appropriate to reduce taxation by massive amounts of that character.
These questions of personal allowances are very important. It is most desirable that we should discuss them from time to time. The Conservative Government have over the years shown interest in them, by the substantial their interest in them, their practical

increases they have already given. The hon. Member for Cardiff, South-East (Mr. Callaghan) criticised the fact that they had not been increased by more than they actually have since 1938–39. The fact remains that practically all the increase has been due to Conservative Chancellors of the Exchequer. If one compares the present situation with that Which existed under the last Budget of a Socialist Government and takes as the basis the amounts of these personal allowances in 1938–39, which was the basis the hon. Member for Cardiff, South-East took, we find the following. The increase for a married man over 1938–39, which was 5 per cent. when the Labour Government fell, is now 331 per cent. and in the case of a single person the increase over 1938–39, which was 10 per cent. when the Labour Government fell, is now 40 per cent. Indeed, there has been a remarkable improvement under both of these heads during the years, and if I may refer to new Clause 4 for a moment, on three separate occasions the Conservative Government have substantially increased the arrangements for child allowances.

5.0 p.m.

Mr. Callaghan: As the Chief Secretary is comparing and contrasting the records of Governments, which I did not do, would he not complete the picture by saying that when the Labour Government came into power the personal allowance was £80 for a single man and that they put it up in a period of extreme financial difficulty to £110, and that the married man's allowance was £140 which they put up to £190? Therefore, the difference is not very great. In fact, the Labour Government increased the single man's allowance by £30 in five years and the Tory Government have managed to put it up another £30 in 10 years. The Labour Government put up the married man's allowance by £40 in five years and the Tories have managed to put it up by £60 in 10 years. If the right hon. Gentleman wants to make that cheap sort of comparison—which I did not make, but contrasted the total level of tax on persons and companies, on the one hand, and, on the other, the level of allowances before and after the war—he might at least give the figures which the Labour Government found when they came to power.

Mr. Brooke: I do not think it was I who introduced party politics into this matter. I do not dispute the figures which the hon. Member has just given, but if he wants the picture completed it should be said that under the Labour Government Income Tax was reduced by a net amount of 6d. and under the Conservative Government it has been reduced by Is. 9d.;all these matters have to be taken into account.
The hon. Member for Bethnal Green (Mr. Holman) and other hon. Members have referred to the cost of living. In this Finance Bill, in Clause 8, we have made special tax reductions for some of those classes most hit by the rising cost of living, but the way to offset the hardship caused by the rising cost of living is for the Opposition to set its face against policies that would involve large increases of expenditure and to give full support to the Government's incomes policy, because it is principally through increases in wages and salaries outrunning the rate of production that the cost of living has been rising.
The hon. Gentleman referred to company taxes and quoted certain figures. I hope he will forgive me if I concentrate mainly on the new Clauses, because I was not sure whether he was sufficiently taking into account in his statement that there was a radical change in the whole system of Profits Tax four years ago. In fact, under the old system, in the last year when Profits Tax was charged, if I remember rightly, at 3 per cent. on undistributed profits and at 30 per cent. on distributed profits, the yield of the tax was £255 million, whereas this year, when there is a flat rate of Profit Tax of 15 per cent., the yield of the tax is estimated to be no less than £374 million.
It is all very well for hon. Members to insinuate that companies are lightly taxed, but the fact remains that the combined effect of Profits Tax and Income Tax on the profits of companies is a tax at the rate of 53¾per cent. I do not think that many people who have any concern with the running of a business, whether private or public, will be the more disposed to vote for Labour candidates after hearing the official Opposition saying that companies in this country are lightly taxed.
The situation which we have had for a long time in this country is a system of taxation which, so far as individuals are concerned, has borne very heavily on the wealthy and very lightly on those on small incomes. If I may quote an entirely independent source in support of that statement, I have in front of me the March, 1961, issue of the National Institute of Economic and Social Research's Economic Review, which is certainly not under the Government's control, in which a very interesting article compares the tax systems of ourselves and of a number of other countries on the Continent and across the Atlantic. I will read one sentence:
Britain taxes the poor lightly and the middle and upper income groups heavily.
That is the answer to these allegations that under our system of taxation those who are living on small incomes are unduly mulcted. The fact is that if we compare the line of our Income Tax on different incomes at different levels with a similar line based on the tax system of almost any other country of the world, it will be seen that our Income Tax falls lightly on small incomes and much more heavily on the large incomes.

Mr. Manuel: Would not the right hon. Gentleman agree that it all depends how one looks at these things? I look at what we have left after the tax is taken off, and my friends have very little left, while the right hon. Gentleman's friends have a great deal left.

Mr. Brooke: If the hon. Member looks at the matter upside down, then it will look like that, but I do assure him that he can examine the independent findings of all kinds of people who have no connection with the British Government and that they will confirm that direct taxation on people with small incomes in this country is relatively low.

Hon. Members: No.

Mr. Callaghan: That is not what was said. What was said was that this is fairer because it is much more progressive than in Continental countries. That is true, but my complaint is that the Government are destroying the fairness by their present policies.

Mr. Brooke: I certainly do not withdraw anything I have said. My point here is that, of course, we have to


examine the personal allowances along with the standard rate, of Income Tax, the reduced rates and the size of the bands to which the reduced rates apply, and this Government has shown in the most practical terms in the last 10 years its interest in reducing taxation, an interest which is greater than that of any other party, to judge from the party policies of the other parties, and the additional expenditure which they would involve, because all that expenditure has to be met out of taxation. If hon. and right hon. Gentlemen opposite were responsible, they would find how difficult it was to meet greatly increased expenditure, while keeping the level of direct taxation unchanged.
To come back to the new Clause now before us, it would be quite inconsistent with my right hon. and learned Friend's judgment on what is suitable for the management of the economy at the moment if he were in this Budget to concede substantial reductions of taxation. Unfortunately, and I use that word deliberately, increases in the personal allowances cost a lot of money, and if what hon. Members opposite suggest were adopted, and we had a cut-off somewhere, they would have to have the cut-off very low down if it were to make any real difference to the cost. It all depends on what result one wishes to achieve, and, quite clearly, a large number of taxpayers, under P.A.Y.E. and otherwise, are concentrated in the lower part of the range. Therefore, whatever arrangements one makes, one cannot enact a £10 increase in one of the personal allowances without its involving a very considerable loss of tax revenue. I have given the figures. If these two Clauses were adopted, it would involve a loss of tax revenue of no less than £84 million a year, and that is far more than my right hon. and learned Friend could agree to. In these circumstances I have no choice but to advise the Committee to reject the Clause.

Mr. Callaghan: The Chief Secretary says that he has no choice, but he has a choice. He has chosen to exercise it. It will not have escaped the attention of the Committee that the total cost of these concessions at £84 million is within £1 million of the cost of the Surtax relief. The right hon. Gentleman has made his Choice.

Mr. A. R. Wise: We have had that five times.

Mr. Callaghan: The hon. Gentleman will have it another twenty-five times. He will hear it another 500 times during the next year, because he does not seem to have realized—indeed, I do not think that he has been in the Committee very long—what the debate is about. The debate is about a matter of fairness and a matter of equal distribution of taxation. I am saying that the Chief Secretary has a choice. It is wrong of him to say that he has not a choice. He has a choice to make today between the Surtax payers and the people of whom we are speaking. He has made his choice. He has chosen the Surtax payers.

Mr. Brooke: Is the hon. Gentleman proposing that the Surtax concessions should be repealed and that the increase in Profits Tax which pays for the Surtax concessions should be repealed at the same time?

Mr. Callaghan: If I proposed that I should be out of order. I will return to that point later. The right hon. Gentleman knows that I would be out of order. It is a remarkable coincidence that there is this close correlation between the Income Tax reliefs which could have been given to P.A.Y.E. taxpayers and the Surtax reliefs which the Government have chosen to give.
I have no hesitation in saying that a Labour Chancellor of the Exchequer, confronted with the same situation, would have given the reliefs to the P.A.Y.E. taxpayer. He is the man who is being hard hit. He is the man whom the cost of living is affecting. He is the man who finds the cost of food, clothing, shoes, rent and beer going up week by week. This is where the relief ought to come, and this is the whole difference between the two sides of the Committee.
The Chief Secretary has made his choice. He is entitled to do that, but he is not entitled to say, "I have no choice but to resist this". He has a choice. He has made it. I say that I differ from him in the choice he has made. It is for this reason that I shall pursue this campaign. During the next twelve months I am determined to make the people of this country understand the position. The Chancellor could have given the reliefs by now, but as he has


not chosen to do so we shall compel him, in so far as public opinion can have any effect on the Government's thinking, before the next Budget is out to face a rising tide of public opinion, because what I am concerned about is relative fairness.
It is not true to say, as the Chief Secretary said, that the poor are lightly taxed in this country whereas on the Continent they are more heavily taxed. The whole point about our taxation system and one of which we were very proud and one which, in all fairness, Conservative Governments helped to do something about before the war, was that through this series of steps and the personal allowances there was a progressive system of taxation which operated as fairly as possible.
5.15 p.m.
What I am complaining about is this. I must repeat the complaint. During the last ten years the Government have departed from their own canons of fairness in order to relieve companies of a far greater proportion of tax than they should have done. How can anyone justify to me that, although the profits of companies have risen by £1,000 million in the last ten years, the total amount of Income Tax and Profits Tax paid by them is less? Is there any normal hon. Member sitting in the Committee today who, if he had had an increase of £1,000 in his income, would not have been paying more tax, unless he were a big Surtax payer? But the whole group of companies, earning £1,000 million more in profits, pay £48 million a year less in tax.
The Chief Secretary said that we had forgotten the recasting of the structure of Profits Tax. Indeed, I have not. It was 25 per cent. it rose to 30 per cent., it mounted to 33 per cent, under the present Government, it was then reduced to 10 per cent., and it has gone up by two successive steps to 12½per cent. and 15 per cent. The right hon. Gentleman tries to justify the reduction of Surtax on this basis, but the fact remains that less is being paid in Profits Tax today by these companies than was being paid ten years ago. Although their profits are £1,000 million higher than they were, they pay less in Income Tax and Profits Tax.
The Committee should probe this matter much more closely than we have

done so far, because the Chancellor has pulled the wool over the eyes of many people by saying that he cannot afford these reliefs. If there were a fair distribution of taxation, he would be able to. I am not asking for a penal system of taxation. All I am asking for is that these groups should pay their fair share of taxation. I say that in times of rising Government expenditure they, too, should contribute, as the P.A.Y.E. taxpayer has had to contribute. That is all I am asking. It is not an unfair request.
The Chief Secretary said that the Opposition would find it very difficult to get rates and tax down with mounting Government expenditure. He should know. It is his task to try to do it. I remind him, as he has brought this fact to our notice, that in 1958–59 the Prime Minister told the country that if they voted for the Socialists they would find that expenditure would rise by £1,000 million in five years. "Do not vote for them", he said. The Chancellor has managed to put up expenditure by £1,000 million in three and a half years. Do not vote for the Tories next time! I must say that I get very impatient with this sort of party poppycock emanating, as it does, from people who, like the Prime Minister, should know better and should be able to put their case on a different basis.
Naturally I agree that it is going to be difficult, but there are big things which the country has to do. I am absolutely positive that if everybody in the country is to assent to make the effort that is needed there must be a conviction that there is fair play. There must be a conviction that as between one group and another and as between one sector of the economy and another no one is being asked to bear an unfair burden.
My complaint against the Government is this. The right hon. Gentleman asked us to support the incomes policy. It was a very rough and ragged affair to support. The simple truth is, as has been brought out more than once in Questions, that in the very year in which the Chancellor introduces an incomes policy the cost of living is allowed to mount at a record rate. In no single period of ten months since the new index was introduced did the cost of living go up faster than it has gone up in the past ten months. The Chancellor is asking


people to accept, as he has said in speeches and in Answers, a real cut in their standard of living at a time when many sections of people, and certainly the companies with their taxation record over the last ten years, are not bearing any cuts in their standard of living but are doing very well indeed. It is the sense of unfairness that I intend to fight against.
I was very alarmed at what the Chief Secretary had to say about the Continental system of taxation. If we are not careful we shall have them shovelling indirect taxation more and more on to the shoulders of the people who are least able to afford it. I admit that there is a case for regrading the rates, but I shall fight against any attempt to put a heavier burden upon the shoulders of those least able to bear it. We are all proud of the fairness of the British taxation system. It has been a wonderfully fair system in the past. Hon. Members opposite have been assisting and conniving in the breaking up of the fairness of that system by their record since 1956, and I hope that my hon. Friends will not allow them to get away with this.

Mr. Fletcher: I have never heard a more miserable speech than that made by the Chief Secretary a few moments ago. I endorse everything that my hon. Friend has said. I hope that the Chancellor will pay heed to the burden of the criticisms being made against him, against the Chief Secretary and against the Government for their refusal to listen to the representations being made in support of the new Clause.
The Chief Secretary quoted from a document and appeared to draw the inference that in some Continental countries there was an even more unfair system of taxation as between the lower-paid and the higher-paid sections of the community than was the case in this country. He did not itemise the countries where the unfairness was greater, and I should like to know where they are.
Even if there are some, does the Chief Secretary really wish to take any credit for that? Is he proud of the fact that there are some countries in Europe in which there is a greater discrimination against the lower-paid sections of the

community than there is against the higher-paid sections? Does not he realise that the success of any community, in Europe or elsewhere, must depend in the long run upon a fair and just basis of taxation? Does not he realise, if he examines the matter in his heart—and does not the Chancellor also realise this—that during the last ten or eleven years, under a Tory Government, the extremes of wealth and hardship in this country have increased? Whereas it was the record of the Labour Government to try to produce less inequality and more equality, and less extremism in respect of wealth, during the last ten or eleven years, as every disinterested person will agree, there has been a tendency towards increased discrimination between those who are well off and have a large spendable income, and are able to indulge in luxuries, and those living on a low margin of income.
Does not the Chief Secretary realise that the policy which ought to actuate any Government interested in securing a socially contented community—one which is able, because of its contentment, to strive and prosper and act in unison, in competition with its European cornpetitors—is to have a just and fair basis of taxation? Does not the Minister realise that the present discontent with the Government, not only in this House but in the country—as evidenced by by-elections and by all the people who lobby us—is due to the fact that it is now recognised that the Government seem bent upon increasing the disadvantages to the lower-paid sections of the community as compared with those who are better off?
This Government have given reliefs year by year to Surtax payers and others at the expense of those who have to pay tax under the P.A.Y.E. system. That is why discontent exists among nurses, teachers, probation officers and the rest. Here, in the Finance Bill, is an opportunity that recurs annually to try to redress the balance. Does not the Minister realise that he has made a grave mistake; that he and the Chancellor have not only done nothing to repair the inequality, but, on the contrary, have stressed and exaggerated it by their whole fiscal policy?
I do not believe that the Chief Secretary or the Chancellor is really proud


of what he has done. It is not only economically stupid, it is politically dangerous and disastrous. The Government will suffer the penalty for it when the General Election comes, as they are now suffering in the by-elections. In their own interest, leaving aside the interests of the country and the community, cannot they reconsider their policies and pay some heed to what my hon. Friends have said? The discussion on the Finance Bill in Committee provides a unique occasion to examine the whole basis upon which taxation is distributed among the various sections of the community.
It is completely irrelevant for the Chancellor or the Chief Secretary to talk about an incomes policy, the pay pause, or increases in the volume of taxation; we are not concerned with that. That is a matter for separate debate. We are now concerned with the fact that, whatever may be the total level of taxation or the total volume of taxation that it is right that the State should exact from the taxpayers to pay for the national services of one kind or another, the total burden should be fairly and equitably distributed among the various sections of the community, and should be seen to be fairly distributed.
It is notorious that in recent years those on small salaries, who have to pay Income Tax under the P.A.Y.E. system, have been unfairly burdened as compared with other taxpayers and Surtax payers, including company taxpayers. I should have thought that it was pushing at an open door to argue this. It is completely irrelevant for the Chancellor to talk about the cost of these proposals, because, if it is right—and it must now be axiomatic—that this reform is essential in order to produce not complete equality and justice but a greater measure of it than now obtains, whatever the cost may be it should be redistributed among other taxpayers.
The policy of the Government has been to increase indirect taxation at the expense of direct taxation. Personal allowances that may have been relevant years ago have now ceased to be relevant, and to the extent that the burden of indirect taxation and the cost of living rises, the injustice of maintaining the old, out-of-date personal allowances becomes an increasing burden on the lowest class of taxpayer. That is what

we are trying to urge upon the Chancellor, whether or not he is taking any notice of it.
I hope that he and the Chief Secretary will not sit there in their places with their stony-hearted, flinty glares, apparently completely irresponsive to the arguments that are being adduced. What is the object of our discussing these matters in Committee on the Finance Bill unless we have some kind of intelligent glimmer of response from the Chancellor and the Chief Secretary? This afternoon we have had a miserable reply, and I hope that this will not be the end of the matter. If that is the policy on which the Government are to stand in the by-elections they are even more doomed to destruction than the results of recent by-elections indicate.
This is the acid test of their policy. If they think that it is clever to go on making concession after concession to a very limited range of Surtax payers they can expect hordes of nurses, teachers, probation officers and the rest of the community to rise up in arms, not only against their incompetence, which is bad enough, but against their injustice and their miserable standards of honesty and fairness. I hope that before we finish with the Clause the whole Committee will rise in righteous indignation against this attitude.

5.30 p.m.

Sir Henry d'Avigdor-Goldsmid: We have had a great deal of talk this afternoon about fairness, and I wonder whether hon. Members realize—I know that the hon. Member for Cardiff, South-East (Mr. Callaghan) realizes—that every hon. Member in the Committee is likely to benefit far more personally if we accept these Clauses than a number of the taxpayers about whom we have been talking. If hon. Members are in the fortunate position of paying Surtax, and perhaps a high rate of Surtax, they will benefit even more. So I think that this is a blunt instrument which is being applied—

Mr. Callaghan: There should be a cut-off Clause.

Sir H. d'Avigdor-Goldsmid: I heard what the hon. Gentleman said, that there should be a cut-off Clause. That was the phrase he used. But I am discussing the proposed Clause.
We have had a lot of information about the time which was devoted to the Clause and the great attention which was paid to it before it was put down and somehow the figure happened to work out at £84 million. I feel that this Clause would have been valuable if brought in as a sort of manuscript Amendment. The suggestion is that we give £84 million back to the taxpayers. But it would go to those taxpayers paying the highest rate of tax. That is absolutely and utterly incontrovertible. More than that, it would affect not at all the large section of the population which pays no tax. First, there would be no relief for people who do not pay tax, and secondly the maximum relief would go to those who are most fortunate in their incomes. If that be the sort of fairness we are asked to support, I have no hesitation whatever in considering that my right hon. and learned Friend is absolutely right.

Mr. Callaghan: That is one of the most specious arguments which I have heard for a long time, and the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) knows it. If what he says is correct he should have voted against all the increases in personal reliefs about which the Chief Secretary to the Treasury was boasting. But I do not remember the hon. Gentleman doing that. I will make this offer to him. I acknowledge the technical difficulties regarding this Clause. If he will assist me in drafting a cut-off Clause and march with me through the Lobbies on Report stage, I will draft a cut-off Clause with his support and we can become Tellers together. Will the hon. Gentleman help me?

Mr. William Ross: I hope the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) will take advantage of the fact that this is the Committee stage and reply to the offer made by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). The hon. Member for Walsall, South did make a specious speech. He does not like blunt instruments. He prefers sharp ones. When there was a proposal in the last Finance Bill to give this £84 million to Surtax payers, without a single penny for the people about whom he is concerned

today, the hon. Gentleman did not offer a single word of criticism. He accepted it with both hands—with the Lobbies outside crowded with hard-up Surtax payers; with processions down Whitehall of Surtax-paying exporters who said they could not export because they had not sufficient relief. We do not need to have Surtax payers in the Lobbies outside. We have them here in the Chamber in places where they matter. If the hon. Gentleman were honest in what he said, he would have objected to what the Chancellor did last year and would have insisted that this year he put a stop to it in view of the present situation which demands a pay pause.
What do we suggest? We suggest that we do belated justice to the people at the bottom of the scale. No one can quibble with the figures presented by my hon. Friend. They are startling. In 1938 personal relief for a single man was £100. Today it is only £140. Perhaps the Chief Secretary can tell me what is the present-day value of a pre-war income of £100. Before the war, in 1938, the relief far a married couple was £180. Today it is £240. No one, on the face of those simple figures, can state that what we are demanding is anything other than simple justice. This is what happened, and it is happening again this year. We may be able to stop nurses from getting pay increases, but we are unable to stop other people covered by cost of living agreements. In factories in Kilmarnock, in the boot and shoe industry, there are people on this basis. As soon as the cost of living moves up a paint or two automatically they get an increase in their wages. People at the bottom of the scale may soon find that without having had more than a rise to meet the rise in the cost of living they will be paying Income Tax. Others already paying tax will have to pay more. That is the Income Tax cheat which has gone on, while the Government ignore the fact, or do not conceal from the public, that just by keeping up personal incomes whenever wages rise to meet the cost of living automatically more tax is drawn in, and from the poorest sections of the population.
If the Government are able in one year to give away £84 million, it makes it impossible, if they are faced with certain Budget-balancing exercises, to


give justice to the people. People at one end of the scale are paying for people at the other, and there is no justice in that. The Chancellor has appealed to the nation in relation to the pay pause, but that appeal fails completely, because this is one of the most blatant things the Government have done. We are asked not to undermine that appeal by the Tory Government to the people. But how can we defend that policy when we are faced with the fact that the Government are prepared to give benefit to the extent of £84 million to people who are far better off than those who are being hit by rising costs?
The Government must face the dilemma in which they find themselves and which is caused by pressure from hon. Members on the back benches opposite in relation to those in receipt of company profits. The figures were quoted by my hon. Friend and they have not been refuted. Taking Income Tax and Profits Tax together, these people are paying less in direct taxation today than during the last ten years. That does not lead to a sense of justice or fairness. The Government are trying to appeal to the hard core of Tory financial support and at the same time they are trying to appeal to the country. But they cannot serve two masters.
I hope that my hon. Friends will pursue this debate, which I consider absolutely vital. It displays the true interests served by hon. Members opposite in matters of finance. This is where we make clear how they have been using

Budgets and Finance Bills over the years to suit their own ends. There is no doubt about it. This country is less socially healthy today than ten years ago. I refer to the nation, as between one section of the public and another. The hon. Gentleman is rather like the Prime Minister who at times looks across the wide horizons of the country and sees whatever he wants to see for the purpose of the peroration to any particular speech he may be making.

A year ago the Prime Minister was telling us that there was more than a spread of materialism in the country. When he was opening a garden fete in Scotland he said that he thought from what he saw in the country that we were on the eve of a great religious revival. Within a month he was talking of juvenile delinquents and the spread of materialism and things detrimental to the true interests of the nation. I wish hon. and right hon. Members opposite would forget their beer and gaming laws and all the rest and try to do something nationally by means of a fair system of taxation. Until they regret the errors of last year in the Surtax promise that they made, and until they fasten themselves to the reality of the unfairness which has been developing towards the lower-paid workers, the country will continue to distrust them.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 176, Noes 250.

Jones, Jack (Rotherham)
Owen, Will
Steele, Thomas


Jones, J. Idwal (Wrexham)
Padley, W. E.
Stewart, Michael (Fulham)


Jones, T. W. (Merioneth)
Pannell, Charles (Leeds, W.)
Stonehouse, John.


Kelley, Richard
Pargiter, G. A.
Stones, William


Kenyon, Clifford
Parker, John
Strachey, Rt. Hon. John


Key, Rt. Hon. C. W.
Parkin, B. T.
Strauss, Rt. Hon. G. R. (Vauxhall)


Lee, Frederick (Newton)
Paton, John
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Lee, Miss Jennie (Cannock)
Pavitt, Laurence
Swingler, Stephen


Lever, L. M. (Ardwick)
Pearson, Arthur (Pontypridd)
Taylor, Bernard (Mansfield)


Lewis, Arthur (West Ham, N.)
Peart, Frederick
Thomson, G. M. (Dundee, E.)


Lipton, Marcus
Pentland, Norman
Thornton, Ernest


Loughlin, Charles
Plummer, Sir Leslie
Timmons, John


Lubbock, Eric
Price, J. T. (Westhoughton)
Tomney, Frank


Mabon, D. J. Dickson
Probert, Arthur
Wade, Donald


Mclnnes, James
Proctor, W. T.
Wainwright, Edwin


McKay, John (Wallsend)
Pursey, Cmdr. Harry
Warbey, William


McLeavy, Frank
Randall, Harry
Watkins, Tudor


MacMillan, Malcolm (Western Isles)
Rankin, John
Weitzman, David


MacPherson, Malcolm (Stirling)
Reynolds, G. W.
Wells, Percy (Faversham)


Mallaieu, J P W (Huddersfield, E.)
Roberts, Albert (Normanton)
Wells, William (Walsall, N.)


Manuel, Archie
Roberts, Goronwy (Caernarvon)
Wigg, George


Mason, Roy
Robertson, John (Paisley)
Willey, Frederick


Mayhew, Christopher
Robinson, Kenneth (St. Pancras, N.)
Williams, D. J. (Neath)


Mellish, R. J
Rodgers, W. T. (Stockton)
Williams, LI. (Abertillery)


Mendelson, J. J.
Rogers, G. H. R. (Kensington, N.)
Williams, W. T. (Warrington)


Millan, Bruce
Ross, William
Willis, E. G. (Edinburgh, E.)


Mitchison, G. R.
Royle, Charles (Salford, West)
Wilson, Rt. Hon. Harold (Huyton)


Monslow, Walter
Silverman, Julius (Aston)
Woodburn, Rt. Hon. A.


Moody, A. S.
Silverman, Sydney (Nelson)
Woof, Robert


Moyle, Arthur
Skeffington, Arthur
Yates, Victor (Ladywood)


Mulley, Frederick
Slater, Mrs. Harriet (Stoke, N.)



Oliver, G. H.
Slater, Joseph (Sedgefield)
TELLERS FOR THE AYES:


Oram, A. E.
Sorensen, R. W.
Mr. Lawson and Mr. Redhead.


Oswald, Thomas
Spriggs, Leslie





NOES


Agnew, Sir Peter
Corfield, F. V.
Hinchingbrooke, Viscount


Aitken, W. T.
Costain, A. P.
Hirst, Geoffrey


Allan, Robert (Paddington, S.)
Coulson, Michael
Hobson, Sir John


Allason, James
Courtney, Cdr. Anthony
Hocking, Philip N.


Ashton, Sir Hubert
Craddock, Sir Beresford
Holland, Philip


Atkins, Humphrey
Crosthwaite-Eyre, Col. Sir Oliver
Hollingworth, John


Barber, Anthony
Crowder, F. P.
Hope, Rt. Hon. Lord John


Barlow, Sir John
Cunningham, Knox
Hopkins, Alan


Barter, John
Dalkeith, Earl of
Hornby, R. P.


Beamish, Col. Sir Tufton
Dance, James
Hornby Smith, Rt. Hon. Dame P.


Bell, Ronald
d'Avigdor-Goldsmid, Sir Henry
Howard, Hon. G. R. (St. Ives)


Bennett, F. M. (Torquay)
de Ferranti, Basil
Howard, John (Southampton, Test)


Bennett, Dr. Reginald (Gos &amp; Fhm)
Digby, Simon Wingfield
Hughes Hallett, Vice-Admiral John


Berkeley, Humphry
Donaldson, Cmdr. C. E. M.
Hughes-Young, Michael


Bevins Rt. Hon. Reginald
du Cann, Edward
Hutchison, Michael Clark


Bldgood, John C.
Duncan, Sir James
Iremonger, T. L.


Biffen, John
Duthie, Sir William
Irvine, Bryant Godman (Rye)


Biggs-Davison, John
Eden, John
Jenkins, Robert (Dulwich)


Birch, Rt. Hon. Nigel
Elliott, R.W.(Nwcastle-upon-Tyne, N.)
Johnson, Dr. Donald (Carlisle)


Bishop, F. P
Errington, Sir Eric
Johnson, Eric (Blackley)


Black, Sir Cyril
Farey-Jones, F. W.
Johnson Smith, Geoffrey


Bourne-Arton, A.
Farr, John
Jones, Rt. Hn. Aubrey (Hall Green)


Box, Donald
Finlay, Graeme
Kaberry, Sir Donald


Boyd-Carpenter, Rt. Hon. John
Fisher, Nigel
Kerans, Cdr. J. S.


Boyle, Sir Edward
Fraser, Hn. Hugh (Stafford &amp;Stone)
Kerby, Capt. Henry


Braine, Bernard
Fraser, Ian (Plymouth, Sutton)
Kimball, Marcus


Brewis, John
Freeth, Denzil
Lagden, Godfrey


Bromley-Davenport, Lt.-Col. SirWalter
Galbraith, Hon. T. G. D.
Lancaster, Col. C. G


Brooke, Rt. Hon. Henry
Gammans Lady
Langford Holt, sir John


Brooman-White, R.
Gilmour sir John
Langford Holt, Sir John


Brown, Alan (Tottenham)
Glyn, Sir Richard (Dorset, N.)
Leather, E H C.


Browne, Percy (Torrington)
Goodhart, Philip
Leavey, J. A.


Bullard, Denys
Goodhew, Victor
Leburn, Gilmour


Bullus, Wing Commander Eric
Cower, Raymond
Legge-Bourke, Sir Harry


Burden, F. A.
Grant, Rt. Hon. William
Lewis, Kenneth (Rutland)


Campbell, Gordon (Moray &amp; Nairn)
Grant-Ferris, Wg. Cdr, R.
Litchfield, Capt. John


Carr, Robert (Mitcham)
Green, Alan
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)


Channon, H. P. G.
Hall, John (Wycombe)
Lloyd, Rt. Hon. Selwyn (Wirral)


Chataway, Christopher
Hamilton, Michael (Wellingborough)
Longden, Gilbert


Clark, Henry (Antrim, N.)
Harris, Frederic (Croydon, N.W.)
Loveys, Walter H.


Clark, William (Nottingham, S.)
Harrison, Brian (Maldon)
Lucas, Sir Jocelyn


Clarke, Brig. Terence (Portamth, W.)
Harrison, Col. Sir Harwood (Eye)
Lucas-Tooth, Sir Hugh


Cleaver, Leonard
Harvey, Sir Arthur Vere (Macclesf'd)
McAdden, Stephen


Cole, Norman
Harvie Anderson, Miss
MacArthur, Ian


Cooke, Robert
Hay, John
McLaren, Martin


Cooper, A. E.
Heald, Rt. Hon. Sir Lionel
Maclay, Rt. Hon. John


Cooper-Key, Sir Neill
Hill, Mrs. Eveline (Wythenshawe)
Maclean, SirFitzroy (Bute&amp;N.Ayrs)


Cordeaux, Lt.-Col. J. K.
Hill, J. E. B. (S. Norfolk)
McLean, Neli (Inverness)







Macleod, Rt. Hn. lain (Enfield, W.)
Pike, Miss Mervyn
Stoddart-Scott, Col. Sir Malcolm


MacLeod, John (Roes &amp; Cromarty)
Pilkington, Sir Richard
Storey, Sir Samuel


Macmillan, Maurice (Halifax)
Pitman, Sir James
Studholme, Sir Henry


Macpherson, Niall (Dumfries)
Powell, Rt. Hon. J. Enoch
Summers, Sir Spencer


Maddan, Martin
Price, David (Eastleigh)
Tapsell, Peter


Maitland, Sir John
Prior, J. M. L.
Taylor, Sir Charles (Eastbourne)


Manningham-Builer, Rt. Hn. Sir R.
Prior-Palmer, Brig. Sir Otto
Taylor, Frank (M'ch'st'r. Moss Side)


Markham, Major Sir Frank
Profumo, Rt. Hon. John
Teeling, Sir William


Marshall, Douglas
Proudfoot, Wilfred
Temple, John M.


Marten, Neil
Pym, Francis
Thatcher, Mrs. Margaret


Mathew, Robert (Honiton)
Quennell, Miss J. M.
Thomas, Leslie (Canterbury)


Matthews, Gordon (Meriden)
Redmayne, Rt. Hon. Martin
Thompson, Kenneth (Walton)


Maxurell-Hyslop, R. J.
Rees, Hugh
Tiley, Arthur (Bradford, W.)


Maydon, Lt. -Cmdr. S. L. C.
Rees-Davies, W, R.
Touche, Rt. Hon. Sir Gordon


Mills, Stratton
Renton, David
Turner, Colin


Miscampbell, Norman
Ridley, Hon. Nicholas
Turton, Rt. Hon. R. H.


Montgomery, Fergus
Ridsdale, Julian
van Straubenzee, W. R


More, Jasper (Ludlow)
Robertson, Sir D. (C'thn's &amp; S'th'ld)
Vane, W. M. F


Morgan, William
Robinson, Rt. Hn. Sir R. (B'pool.S.)
Vickers, Miss Joan


Morrison, John
Robson Brown, Sir William
Vosper, Rt. Hon. Dennis


Mott-Radclyffe, Sir Charles
Rodgers, John (Sevenoaks)
Wakefield, Sir Wavell


Nabarro, Gerald
Roots, William
Walker, Peter


Neave, Airey
Russell, Ronald
Ward, Dame Irene


Nicholls, Sir Harmar
Scott-Hopkins, James
Wells, John (Maidstone)


Nicholson, Sir Godfrey
Seymour, Leslie
Whitelaw, William


Noble, Michael
Sharples, Richard
Williams, Dudley (Exeter)


Nugent, Rt, Hon. Sir Richard
Shaw, M.
Williams, Paul (Sunderland, S.)


Oakshott, Sir Hendrie
Skeet, T. H. H.
Wills, Sir Gerald (Bridgwater)


Orr, Capt. L. P. S.
Smith, Dudley (Br'ntf'd &amp; Chiswick)
Wilson, Geoffrey (Truro)


Osborn, John (Hallam)
Smithers, Peter
Wise, A. R.


Osborne, Sir Cyril (Louth)
Smyth, Brig. Sir John (Norwood)
Wolrige-Gordon, Patrick


Page, Graham (Crosby)
Soames, Rt. Hon. Christopher
Worsley, Marcus


Page, John (Harrow, West)
Spearman, Sir Alexander
Yates, William (The Wrekin)


Pannell, Norman (Kirkdale)
Stanley, Hon. Richard



Pearson, Frank (Clitheroe)
Stevens, Geoffrey
TELLERS FOR THE NOES:


Peel, John
Steward, Harold (Stockport, S.)
Mr. W. Clark and Mr. Batsford


Pickthorn, Sir Kenneth
Stodart, J. A.

New Clause. —(CHILD ALLOWANCE: DISREGARD OF EARNINGS.)

(1) For the purposes of child allowance under the Income Tax Acts a child's earnings during the year in which the child leaves school shall be disregarded; and accordingly section two hundred and twelve (children) of the Income Tax Act, 1952, shall have effect with the addition at the end of subsection (4) (limit of child's income and disregard of educational endowments) of the words "or which the child earns during the year of assessment in which the child leaves school."

(2) This section shall not be deemed to have required any change in the amounts deducted or repaid under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act, 1952, before the twenty, second day of June, nineteen hundred and sixty-two—[Mr. Houghton.]

Brought up, and read the First time.

Mr. Douglas Houghton: I beg to move, That the Clause be read a Second time.
It might be convenient, Sir Norman, to take with this new Clause the new Clause—Extension of child allowance—and the new Clause—Increase in child allowance.
This new Clause has three qualities —it is novel, it is simple, and it would not cost the Chancellor very much. As to its novelty, many of these new Clauses are debated in a different atmosphere

and with a different budgetary background year after year. They reflect particular grievances with our taxation system, or contain demands to meet particular circumstances. This new Clause deals with something that has been ventilated from time to time in Committee stages of Finance Bills in the past, but never before have we brought forward a proposal to deal with it.
I hope that it will appeal to the Chancellor. It attempts to deal with the grievance of the withdrawal from the parents of child relief in a year during which a child leaves school and goes to work. 'As the Committee knows, child relief from the parents' Income Tax is not given if the income of a child in its own right exceeds £100 in the year of assessment. That applies whether the income is investment income or earned income.
In the case of investment income, the parents generally know from previous years the approximate amount of income the child will receive, and the question of whether or not they are entitled to the relief can usually be settled before the tax year begins. In the case of children leaving school and earning, no similar prediction is possible. In fact, the parents cannot be


certain that the child will, in fact, leave school in a particular year, nor do they know that, even if the child does leave school, it will earn over £100 by the end of the tax year.
The Inland Revenue deal with the situation in two ways. One way is to look at the ages of children on the tax returns, presume that a child will leave school, and presume that it will earn £100 before the end of the tax year. That presumption rests on the belief that the child will leave school at the end of the summer term and begin to earn and that, at present rates of pay, it will earn more than £100 by the following 5th April.
In such cases the Inland Revenue withdraws the child's allowance from the parents tax coding for the year. When a parent says, "Where is my child allowance?" the Inland Revenue replies," In your own interests, we have not given it to you because we think that this child may leave school and earn more than £100 before the end of the tax year and you would be very upset if you had the child relief on your P.A.Y.E. week after week and were later told that it had to be withdrawn and that you owed the Department something." In some cases, the parent acquiesces in a step that deprives him of child relief in the expectation that, in any case, he might not be entitled to it by the end of the year.
In other circumstances, the child relief is given. The children may leave school, begin work and earn more than £100 by the end of the year. When the Inland Revenue get to know about that, it withdraws retrospectively that relief which has been given on the parent's Income Tax. Sometimes the Inland Revenue is informed by the parents that the child has left school, has started work and is earning so much a week and that it looks as though the child will earn more than £100 by the end of the tax year so the relief had better be withdrawn. Those parents are not only honest and straightforward, but know their Income Tax as well.
In other cases, the Inland Revenue is not aware that the child has started work and has earned that amount by the end of the year. When the Depart-

ment does hear of it, the allowance is withdrawn retrospectively. In fairness, it is unusual, indeed, for the parents to be asked for a cash lump sum payment on the withdrawal of the child allowance. The usual practice is, in the departmental jargon, to "code it in"; that is to say, the amount of tax due is worked into the code number, so that the extra amount of tax is recovered on top of normal P.A.Y.E. in the course of the ensuing tax year. That is very convenient to those affected.
What I plead for in this new Clause is that in the year in which the child leaves school the earnings of that child should be totally disregarded for the purpose of the tax relief of the parents; in other words, I ask that the child's earnings in that year shall be treated exactly as if they were an educational endowment. I do not, of course, ask the Committee to equate earnings with an educational endowment; I merely say that the new Clause would give to earnings in the year in which the child leaves school the same tax treatment as an educational endowment—which, as hon. Members know, does not disqualify the parents from child relief.
I am sure that most hon. Members have had letters or visits from parents complaining about this awkward business of child relief in the year in which the child is leaving school. Parents do not want a relief which they will later have to repay. They feel that it is somewhat unfair to have the relief withdrawn in a most expensive year in the child's life. Many parents say that the children have gone from school uniforms to working clothes;that they have had to fit them out with clothing suitable for their job. The children have ceased to be school children and have become adults and workers and have to mix with others. There arises the whole question of their contribution to the upkeep of the home, and how much of their earnings they shall spend on themselves. There are few parents who are not prepared to assert that in the year in which their children leave school they are put to a good deal more expense than in the year before or expect to have in the year after. In asking for this new treatment of earnings in the year in which the child leaves school we are not only seeking to avoid a good


deal of messing about with the parent's Income Tax. We think that it is justified on the merits of the case.
6.0 p.m.
While I have been dealing with the proposed new Clause standing in my name, our discussion is also associated with the proposed new Clause concerning the extension of child allowance and that concerning an increase in child allowance. I have no wish to anticipate any discussion on the two latter Clauses except to point out that they are not directly related to the point in the Clause in my name, though they deal with the equally troublesome problem of a cut off at precisely £100 in the income of the child for tax relief. That is to say, if the income of the child is up to £100 the parent gets full tax relief but if it is £101 the parent gets no relief at all, and the two proposed Clauses being discussed with this one deal with a tapering arrangement.
Those two new Clauses would assist me in the problem being dealt with in my new Clause, because if there were a tapering arrangement when a child leaves school and begins to earn—even if it is somewhat more than £100 in the same tax year—the parents would not be deprived wholly of the child allowance if, under a tapering arrangement, some proportion of the child allowance was still granted to them. In that sense the three Clauses deal with a common problem but the one in my name deals expressly with the problem of the child leaving school and earning money in the same tax year.

Mr. William Clark: With his usual expertise the hon. Member for Sowerby (Mr. Houghton) has explained the machinations as to how child allowances are granted under the P.A.Y.E. system, and so on. I do not go quite all the way with him regarding the proposed new Clause in his name, although there was a good deal in what he said with which I agree. The fallacy of his argument concerns his remarks about a child leaving school and earning more than £100. Many children, even leaving in the summer term before the succeeding 5th April, earn £100. Therefore, his Clause would divide children into two classes, those who earn £100 or less and those who earn £100 or more.

Mr. Houghton: I am saying that they are at present divided into two classes—those who earn more than £100 and those who earn less. My proposed new Clause says, in effect, that we should disregard the earnings of the child in that year, however large or small they may be. Instead of dividing them I am uniting them in one comprehensive disregard.

Mr. Clark: I take the point. But in the proposed new Clause in my name dealing with an increase in child allowance I have attempted to bring the allowance down to a more realistic level so that, if a child allowance is being paid, it can take into account income above £100. It is, after all, nonsensical for it to he £100, in which case the parent gets an allowance, but that, if it should be £101, the parent loses it. I should have thought that the Treasury could accept the principle which is operated for dependants' relief where it is reduced pound for pound. Surely that is a good principle and precedent on which to base child allowances?
This would be easy in application, there would be no difficulty concerning P.A.Y.E. and it would avoid the problem which the hon. Member for Sowerby pointed out where one has a re-coding in the succeeding year for a child leaving school. To a certain extent we taper off the financial burden which must be borne by parents, and I hope that the Financial Secretary will hold out some hope that the income limit of children will be made a little more realistic so that it will not suddenly be cut off at £100 but will, instead, be cut off pound for pound over the £100 mark in the same way as we deal with dependant relatives' allowances.

Mr. Bruce Millan: The difficulty we are attempting to remove by the three proposed new Clauses has already been well explained. I agree with my hon. Friend the Member for Sowerby (Mr. Houghton) that the most important person we should be trying to help is the parent of a child who leaves school during the Income Tax year, and I certainly support the Clause in the name of the hon. Member for Sowerby from this point of view.
The Clause in the name of the hon. Member for Nottingham, South (Mr. W. Clark)—Increase in child allowance—


goes a good deal further because it would provide assistance to any parent regardless of how the child's income was obtained. The Clause standing in my name, the extension of child allowance, is similar to that in the name of the hon. Member for Nottingham, South in that respect, although it would be rather less expensive to the Revenue because the income limit laid down in my proposed new Clause is rather less generous than that contained in the other.
The important point to consider is that parents feel that they are being treated unfairly—either when they find that the Inland Revenue has stopped their child allowance before the child has left school or if they find later in the year that they have been getting an allowance and have suddenly accumulated a debt because the child's income has gone beyond £100. This limit of £100 beyond which no allowance can be paid is really artificial. I realise that there must be a limit of some sort but there should be some system that provides that there is not just a complete change from getting an allowance to getting nothing at all.
The hon. Member for Nottingham, South drew an analogy with the dependant's allowance and, of course, the proposed new Clauses in his name and in mine are designed to bring child allowances into line with the dependant's allowances. I will anticipate what the Financial Secretary will say when he comes to reply. He will probably say that for dependant's allowances it is not terribly difficult for the Revenue to operate a sliding scale system because the dependant's income is likely to be known in advance so that there is no need for this tiresome adjustment at the end of the year. He will probably say, regarding children—particularly when the child is leaving school—that such a practice might not be so easy. There is a certain point in that but it can apply only to the child leaving school because the child who has an income of up to £100 has probably got a fixed income which is strictly in line with the dependants relief. We come down to the practical difficulties concerning the child leaving school. I accept that there would be a certain amount of difficulty in operating this and that there would have

to be some forecast of what the child's income is likely to be.
The choice is really between making that forecast and an adjustment at the end of the year or continuing with the present system. I have no hesitation in saying that greater injustice and a considerable amount of trouble are caused by the Revenue continuing the present system. Therefore, despite the administrative difficulties, I hope that the Financial Secretary will at least accept the principle of the new Clause.
When this matter was discussed on the Finance Bill, 1957, it was said that there would be about 300,000 cases a year and that it would require about 450 additional Inland Revenue staff to deal with them. I see the Financial Secretary nodding his head. I must, therefore, have my figures right. I do not believe that it would need 450 additional staff to deal with an adjustment like this. That would mean that, for each additional member of the staff, there would be over 600 cases to be dealt with in a year—in other words, that it would take one complete Inland Revenue staff day to deal with two adjustments of children's allowances of this sort.
I just do not believe that it would require anything like as many additional staff as was suggested in 1957. If these figures are repeated this afternoon, I say that the Treasury's case is not good enough and that the Inland Revenue and the Government should consider this matter again. I hope that I am wrong in anticipating what the Financial Secretary will say and that he will accept one of the new Clauses, which deal with a very real difficulty and which, if accepted, would get rid of a considerable sense of injustice among parents about the operation of the present child allowances.

Mr. Michael Shaw: I have a great deal of sympathy for the new Clause moved by the hon. Member for Sowerby (Mr. Houghton) with his usual clarity. He looked at it, very properly, from the Inland Revenue's point of view. Looking at it from the professional accountant's point of view, it is messy to have to deal with the child allowance during the last year of school. It is perhaps even more mess when we have to deal


with the case of the child who goes on to further whole-time education, because the habit sometimes is to drop the child allowance more or less automatically every year just to ensure that the Inland Revenue does not slip up in allowing it for too long a period. The small but cumulative effect if it happens in many cases is that every year one has to take up the question of altering the coding notice for one's client so that his child allowance can be re-entered on the coding notice. The accountant then adopts this as the usual practice but one year later finds that it is necessary to send the notice back to be re-altered because it is decided that the child should go into gainful employment in which he will be earning more than £100 a year.
Another feature which I do not like about this allowance is that there is an element of restrospection about it. At the beginning of the year, the parent is entitled to it. In my experience, more often than not, he obtains the benefit of the allowance. Most children begin working in the autumn, and it is not until the back end of the Income Tax year, possibly the last few weeks, that it is certain that the £100 will be exceeded. The result is that the coding notice is altered at the last moment, which is very unpopular with the taxpayer, or, as the hon. Member for Sowerby said, it is coded into the next year and the parent who thought that he had got his child off his hands finds that he is still paying for him. That is unfair.
Very few allowances, if any, work in this manner. The single allowance which is enjoyed by the fiancée before she gets married is not taken from her when she is married. She is entitled to it in full provided that her income is sufficient to cover it. On the other hand, the lucky man who is getting married, usually just before 5th April, collects the whole of his marriage allowance. There seems to be no difficulty, although her status has not been kept throughout the year, in having the whole of the allowance granted for that year.
6.15 p.m.
I wonder whether the Treasury is afraid of giving this child allowance to a parent in respect of a child at the same time as the child obtains a personal allowance in his own right through

his earnings during the second half of the year. Since the single allowance and marriage allowance are granted in the same year, why should not the same principle be adopted in the case of the parent whose child begins to earn in the second half of the year? Because it would cost so little and because it would count in only one year, why should not such a system be adopted?
I am not happy about one curious point in the new Clause. Knowing by whom it has been drafted, I am not sure whether it has been drafted in this form deliberately, or, if I may say with all due humility, in error. Why does the new Clause refer to the amount which the child earns during the year of assessment in which the child leaves school? I should like it to refer to the year in which the child ceases to enjoy full-time education. More often than not, a child is more expensive the older he becomes. I should have thought that the year in which a child went to a university, or wherever it may be, would be much more expensive to the parent than the year when he reached the age of 16, or whatever it may be, when he leaves school.
Subject to what I have said, I view the new Clause with the greatest possible sympathy.

Mr. Bellenger: In a long experience in Parliament, I have generally found on the Finance Bill that it is seldom that the Treasury spokesman gives way, whatever arguments may be advanced. We have heard a reasoned argument from the hon. Member for Brighouse and Spenborough (Mr. Shaw), and I hope that the Committee will look at the matter in that perspective.
My hon. Friend the Member for Sowerby (Mr. Houghton) said that the cost of implementing the new Clause would be very small. Perhaps the Financial Secretary will help to put the matter in proper perspective by telling us how much it would cost. However, if my hon. Friend is right, I should have thought that this was not an occasion on which Parliament should deal with dry-as-dust words or with Treasury briefs such as the one which, no doubt, the Financial Secretary has, but one when we should deal with matters in a human way, subject to the cost.
What would be a human way to deal with this matter? The parent, not the child, gets this allowance because the child is a burden or a liability on the parent. If the child leaves school during the financial year, it may be said that he ceases to be a burden on the parent. When the child becomes a wage earner in his own right, the Treasury takes its cut from his wages through P.A.Y.E. But every married Member of this Cornmittee—and I hope that the Financial Secretary is paying attention to this—who is a parent knows that if a child is born just the right side of the financial year the parent immediately becomes entitled to a child allowance. It is all, as it were, the luck of the draw. If the child is born within that financial year by one day only, the parent will get his £100. If, as the hon. Member for Brighouse and Spenborough has said, a couple marry just inside the financial ear—as many do, purposelyamp—they not only get £140 single allowance but also £240 married allowance.
Always, of course, bearing in mind the cost which the Financial Secretary will shortly tell us about, it all boils down to the question of whether Parliament is to act in a human way, at very little cost to the Revenue, by saying that the parent who has budgeted for his child over the whole year, and has borne the burden of keeping him a whole year, shall be entitled to the £100 child allowance and that it shall not, to use the words of the right hon. Member for Woodford (Sir W. Churchill) when he was Chancellor of the Exchequer, be "clawed back" from him.
We should give this concession to the parent who has not found the child allowance of £100 a year sufficient to enable him to keep that child in proper circumstances. Or must the Inland Revenue have its full pound of flesh, as I mentioned last week, and claim that as the child has now started earning it will take its cut from his earnings in his own right while, in addition taking back the allowance from his parent because the child has not remained at school to the full limit of the financial year?
Is not this an argument to appeal to hon. Members opposite? In the event of the Financial Secretary resisting this Clause, I suppose that they will go into

the Division Lobby in his support. I can understand that attitude on most issues, but this is one issue which should not be decided on party lines. It is one at which, for once in a while—very seldom do we do it—Parliament should look in human terms. I urge the Committee to support the Clause. I urge the Financial Secretary to give way and so earn, at long last, some little credit for the Government. Everybody knows that they need it.

Mr. J. A. Leavey: I want briefly to support the plea made by hon. Members on both sides of the Committee. It is not often that one gets an opportunity of saying that one wholeheartedly supports all the speeches on both sides, so this one is not to be missed. The arguments adduced by the hon. Member for Sowerby (Mr. Houghton) appealed to me but I wonder whether, if a child is in full-time education, it would not be better to use the phrase suggested by my hon. Friend the Member for Brighouse and Spenborough (Mr. Shaw).
There is also the question of whether one day would qualify, as it does in the case of the married allowance, for parents' relief for the whole year, or whether we would have to write into this provision a minimum period. It could be that the child was in full-time education until the 6th April, which would mean that it was in full-time education for only one day of a financial year, and one wonders whether relief should be applied, in such cases, for the whole of that year.
I do not want to go again over the general point arising from the other two Clauses we are discussing. The arguments have been powerful. It seems to me that, when this Committee decided that if a child has an income of £99 the parent should be entitled to relief, it was not intended that if the income was £101, the parent should get no relief. It seems at least improbable that that was the intent of Parliament.
I am not happy about the argument that my hon. Friend the Financial Secretary will oppose this on the grounds that it is administratively difficult or inconvenient. This is seldom a convincing argument, because one must remind my hon. Friend that Inland Revenue


officials, although many of us have great respect for them, are, after all, public servants. They are certainly subject to difficulties, but if it is concluded that the present position should be changed, they should find ways of meeting the proposal.
I know that it is difficult for my hon. Friend to meet pleas from hon. Members on this side of the Committee for what are, in effect, increased burdens on the taxpayer at a time when he is also often being asked to reduce Government expenditure, for it is these small items which make a large contribution to the whole. I appreciate that difficulty. None the less, since this proposal seems to have the wholehearted support of both sides of the Committee, I hope that he will give an encouraging answer, at least on the administrative difficulty. There might be a compromise proposal to get over this, which would not involve the enormous number of Revenue man hours referred to by the hon. Member for Sowerby. I support the pleas that have been made.

Mr. Tomney: I am sure that the Financial Secretary cannot refuse to accept this Clause in view of the general opinion expressed by hon. Members on both sides of the Committee. Nevertheless, I shall not be surprised if he finds a way round it. I can appreciate the desire of the Treasury to have everything nice and cushy. I can appreciate the fact that countless fathers are penalised in one way or another because they do not reclaim what is due to them under the present system.
One cannot help thinking that the present provision was drawn up when employment was more on a geographical basis than it is today. The sentiments expressed by my hon. Friend the Member for Sowerby (Mr. Houghton) were the real basis of what is involved here. This is the additional expense which parents are put to in the first year after a child leaves school to take up a job or a career. In the case of children taking up professions, the outlay is usually greater.
What has happened to the pattern of employment, at least since the war? In the new towns, for instance, the opportunities for careers for youngsters are limited, for they are populated overwhelmingly by young married couples

with children. Vacancies may not arise regularly to a great extent, which means that young people often have to travel in order to take up their first jobs. There are children today who are spending more on travelling to and from work than they earn in the first year of their employment. That is why this Section of the Income Tax Act, which was framed for other days, is not sensible today.
If a boy is apprenticed to a trade or articled to a profession there are many things, such as books or drawing materials, which he has to buy in connection with that trade or profession during his first year of employment, and the father finds that it is a heavy expense to launch his son on a career.
The proposal of my hon. Friend that a child's earnings during the year in which the child leaves school should be disregarded is a reasonable one. Whatever difficulties the Treasury may find, they are not big enough to warrant the refusal of benefit to parents who are trying to launch their children in jobs or careers.
I know something about the ambitions of ordinary people for their children. In the main they want their children to do better than they themselves have done, and they are prepared to make sacrifices for them; but the Treasury should not also ask them to make sacrifices. I do not know what excuses the Economic Secretary will think up, but they will have to be good ones. This is a new Clause which in equity he cannot possibly refuse to accept. It will confer a benefit in the first year in which a child leaves school when the parents' worry is greatest and when relief is most needed. If the Economic Secretary accepts this new Clause—and I cannot see how he can refuse it in view of the general opinions expressed—it will confer a real service on parents.

6.30 p.m.

Mr. Edwin Wainwright: I hope that the Financial Secretary will take note not only of the frontal attack in respect of these proposed new Clauses but also of the rearguard action. It is always more dangerous to be attacked from behind than from the front. As so many of his hon. Friends have spoken in favour of the principle behind these Clauses, I hope


that he will give way on this issue. The Clauses dealing with the extension of child allowance and increase in child allowance may be called complicated and they may cause a good deal of administrative work. That no doubt will be the argument which the Minister will use. But if that argument is used in respect of those Clauses, it cannot be used in regard to the Clause concerning disregard of earnings. There will be no administrative difficulty at all about that Clause, and no increased work would be required to introduce its principle.
The first year that a child starts work has been mentioned as one of the most costly years, no matter what kind of work the child undertakes. The clothes which it has been wearing at school will not be suitable. New clothes have to be bought for the young boy or girl commencing work. The thought in the heart of any boy or girl going to work for the first time is, "I am now commencing life on my own and I want to make a contribution to the household." What kind of contribution can a boy make? It is a very small one and the father may easily get into difficulties in trying to help him.
The Inland Revenue will say that this young person will be earning above £100 in the present financial year and therefore Income Tax allowance will not be allowed. Supposing that in the first month of commencing work, after Income Tax allowance has been stopped, a boy goes off work because of sickness or accident. He may be away for only a short period of time, but the father is responsible for keeping his child. I know that it may be said that if the father is working he cannot claim National Assistance for this young person but the young person can claim. That is a ridiculous state of affairs, because if the young person goes to the National Assistance Board he will be refused benefit because he will be living at home. Therefore, the father is not only denied Income Tax allowance for this young person, but he is also denied any contribution from income or wages which could be made by that young person.
We must not forget that a young person cannot claim sickness or unemployment benefit, or benefit under the

Industrial Injuries Acts because he has not sufficient stamps on his card to enable him to qualify. Therefore, the family is worse off than before the boy or girl started work. I hope that the Financial Secretary will take these matters into consideration.
There is always a demarcation line where benefits are allowed or refused, but I hope that the Financial Secretary will not use the argument of the demarcation line on this issue. My hon. Friends have explained the difference that can result in respect of Income Tax allowance if a child is born either on the 5th or 6th of April, and also in respect of the date on which a young couple get married. There must be some demarcation line and no argument of that kind ought to be used.
My hon. Friend the Member for Hammersmith, North (Mr. Tomney) mentioned the cost of travel, and it is true that travel is very costly, especially for the low wage earner, the boy or girl just starting work and having to pay the same fares as an adult whose wages may be ten times as much.
I hope that the Financial Secretary will look more cheerfully at this issue and be a little more graceful about accepting the new Clause, especially the first of three which we are discussing. If he cannot accept the other two now, I hope that he will consider them with a view to making a similar provision at a later date. There would be no administrative cost involved in the implementation of the first new Clause and, as it has been supported by many hon. Members opposite as well as on this side, I hope that the Financial Secretary will accept it and put it into operation.

Sir William Robson Brown: There have been so many powerful and convincing arguments from both sides of the Committee in support of this new Clause that I shall make what is probably the shortest speech in this or any other Session by appealing to my distinguished bachelor friend on the Government Front Bench to have some sympathy with married people in these circumstances. The only thing which will convince me in anything he will say is on the score of excessive cost. I hope that the figures will not reveal that and


that on one occasion at least the Committee will be united, Front Benches and back benches alike, on at least one new Clause,

6.45 p.m.

The Financial Secretary to the Treasury (Sir Edward Boyle): The hon. Member for Hammersmith, North (Mr. Tomney) said that he thought that the Treasury must capitulate on this occasion, given the completely unanimous view expressed on both sides of the Committee. I can only say that it is evident that he was not here for our proceedings last Friday. I well remember my own first Session in Parliament when it fell to me to move two or three new Clauses from the back benches on the other side of the Committee when the right hon. and learned Gentleman the Member for Newport (Sir F. Soskice) was a Law Officer, and he was a much better goal keeper than ever I shall be in this Committee. I hove that the Committee will have noticed the presence of my hon. Friend the Parliamentary Secretary to the Ministry of Education. On an earlier Clause of the Bill, exception was taken from the Front Bench opposite when my right hon. Friend the Secretary of State for War was not here. We took that rebuke in the spirit in which it was offered, and that is why my hon. Friend the Parliamentary Secretary is with us for this discussion.

Mr. Ross: Can the hon. Gentleman tell us where the Secretary of State for Scotland is, as he is responsible for education in Scotland?

Sir E. Boyle: I do not know where he is, but I suspect that he is better employed than he would be as a second Minister listening to this debate.
The other thing I have to do is to reply to the right hon. Member for Bassetlaw (Mr. Bellenger), who hoped that I would not speak from a Treasury brief. I have notes for a speech, but I do not in fact have a brief before me. We were told by one of your predecessors, Sir James, that he never objected to seeing Members rise with notes for a speech because there was then a fair chance that their speech would have a beginning, a middle, and an end. That is wise advice when one is dealing with very complicated matters on the Finance Bill.
In this group of new Clauses we are dealing with proposed Amendments to Section 212 (4) of the Income Tax Act, 1952, which provides that the child allowance shall not be given in respect of any child who is entitled in his own right to an income greater than £100 a year. As the Committee will know, there is a proviso to that subsection which says that in the child's income for this purpose, income from
a scholarship, bursary or other similar educational endowment
is to be ignored. The first new Clauseamp—and I shall take that first and deal with the other two later—would add a further item of income to be disregarded, namely, a child's earnings during the Income Tax year in which he leaves school. The cost of this proposal is a good deal higher than has been suggested by hon. Members on either side of the Committee. It is estimated at £10 million in a full year, and I must tell the Committee straight away that on the ground of cost alone the Chancellor could not accept this proposal.

Mr. Bellenger: That is in relation to the parents, ignoring the earnings of the child.

Sir E. Boyle: That is the cost of doing what is proposed in the new Clause.
The Committee ought also to consider the principle involved. I do not think anyone on either side of the Committee would seriously dispute the necessity for some limit on the child's income. The allowance, after all, is a relief. I noticed that the hon. Member for Sowerby (Mr. Houghton) quite rightly referred to this as child relief. It is a relief to those who have dependent children to support, and ever since this relief was first introduced, everyone has always recognised that there must come a point at which there could not be justified both an allowance against the parents' income in respect of the child and at the same time an ordinary single person's personal allowance against the child's own income. In other words, there must come a point at which duplication of personal allowances could not be defended, and the question is simply at what point this duplication should cease.
It is a point on which Parliament has taken different views over the years. This income limit was originally set at


£40 in 1920. It has been raised from time to time and was last increased in the Finance Act, 1957, from £85 to the present figure of £100. The first new Clause proposes not to abolish this limit of £100, but rather to exclude a particular source of income for a particular year.
I cannot see that any very strong case for this proposal can be made in respect of the period after the child's first job has begun. It is true that a child's earnings at the start of his first job may need to be earmarked to be spent, for example, on special clothing or equipment. I recognise that, but, after all, this may also happen to a wage or salary earner at almost any point of his working life, and the child in question has earned the money even though part of it may need to be used in a particular way.
Our whole system of direct taxation is based on the principle that taxpayers are charged according to their general economic circumstances. It is one thing to have, as we rightly have, a carefully devised system of tax allowances, but it would be quite another to say that a taxpayer should not be charged on his earnings because of certain particular expenses that he, or his parents, have to bear at a particular point in his life.
The other argument which one often hears in support of a proposal like this is that at the beginning of the tax year in which children leave school they are still, as a general rule, entirely dependent on their parents for support. That is an argument with which one must have a certain degree of sympathy, but I must remind hon. Members of the very important principle recognised by the Radcliffe Commission as applicable to personal allowances, and I quote two or three sentences from paragraph 152 of the Radcliffe Commission's Second Report.
…income tax is an annual tax that has got to be administered. It is a tax that has to be collected each year from many millions of the population …the range of allowances must be limited to certain broad categories of distinction that commend themselves by their obvious justice: they must be simple in their terms and free from detailed refinements.
It is in accordance with that principle that personal allowances for the tax year are regarded as a unit. There cannot be, as a practical matter, any elaborate

system of apportionment. The amount of the child's own income has to be taken into account over the same entire tax year as that for which the parents' claim for allowances is made.
I do not think that one can draw an analogy between income derived from earnings and scholarship income which is already disregarded when calculating the child's income. It seems quite reasonable to maintain on the one hand that an educational award, like a scholarship, ought to be given special privileges for tax purposes, while a child's earnings in the year in which he leaves school must be regarded as income, just like any other earnings. It would surely be wrong to deal with such earnings in a special manner merely because the child was attending school at the start of that year.
I have devoted some time to the principle of this new Clause because, as I have said, it would be expensive. Not only would it be too expensive for this year, but I think that hon. Members, even those on the back benches, should think very hard before committing themselves to the support of the principle enshrined in the first of the new Clauses.

Sir W. Robson Brown: I wonder what my hon. Friend's views are with regard to apprentices, who are very similar to people undertaking further education, and whose earnings are very much less than they would be if they were doing an ordinary common or garden manual jab.

Sir E. Boyle: We shall be coming to the subject of the apprentices on another new Clause. Briefly, I would say that I realise, of course, the problems of people undergoing particular kinds of training, but I am still not convinced that the Committee would be well advised to support what would be a fairly big departure in our tax system as described in the first new Clause, which would cost a great deal of money.
I would rather turn now to the cost of the two other new Clauses that we are considering, which deal with the same point in a different way. The idea of both these Clauses is to give a partial child allowance to children with incomes above the statutory limit of £100.
The new Clause in the name of the hon. Member for Glasgow, Craigton (Mr. Milian), which is ingeniously worded, proposes that where a child's income is over £100 but not over £200, a partial allowance should be granted on a diminishing scale. The alternative proposal by my hon. Friend the Member for Nottingham, South (Mr. W. Clark) and other hon. Friends of mine contemplates that the partial allowance should be the sum arrived at by subtracting from the normal child allowance a £for every £by which the child's income exceeds the statutory limit.
These are both ingenious proposals, and I apply that remark particularly to that by the hon. Member for Craigton, who made an attractive speech to the Committee. He has obviously given the matter a great deal of thought. I rather dissent from the view of the hon. Member for Dearne Valley (Mr. Wainwright) that the first of the proposed new Clauses is the best. In replying to the Clauses, I would say frankly that of all the starters in this race the one that caught my eye the most was that proposed by the hon. Member for Craigton, which is certainly a very ingeniously-worked-out one. It has the merit also, as I think he rather suggested, of being cheaper than the proposal by my hon. Friend. My hon. Friend's proposal would cost about £8 million in a full year, which is about double the cost of the new Clause proposed by the hon. Member for Craigton.
I am, indeed, not sure whether the new Clause proposed by my hon. Friend would quite carry out his purpose. As drafted, it fails to get rid of the express words in Section 212 (4) which preclude any allowance at all when the child's own income exceeds £100.
The idea of a tapering off of the child's allowance has been discussed on a number of occasions since 1951. It was discused in 1952, 1954 and again in 1957. As I was in the Treasury in 1955 and 1956, this is not to me quite such a hardy perennial as some other subjects such as shale oil, which we tend to discuss year by year.
Indeed, I fully accept that the case for some tapering provision in connection with the child's allowance is in theory reasonable enough. I know it seems unfair to many people that when a child

has an income of £100 his father can claim the full figure in his relief—£100, £125 or £150 according to age—but that as soon as the child's income exceeds £100, however small the excess is, his father can claim no relief at all.
But I must tell the Committee, as many of my predecessors have done—though I assure hon. Members that this will not be my last word on the Clause —that whatever may be said in theory in favour of a tapering provision, any proposal of this kind would give rise to really considerable administrative difficulties, particularly in relation to P.A.Y.E. As this point has been mentioned by a number of hon. Members, perhaps I could explain how this difficulty comes about.
The trouble is that P.A.Y.E. works smoothly only when the code number given to an employee before the beginning of the year accurately reflects the allowances to which he is entitled for that year. With a standard income limit for child allowance, no serious difficulty arises. It is not necessary to estimate exactly what will be a child's allowance for the coming year. One has only to estimate whether or not it will exceed the prescribed figure of £100. I am assured that in the overwhelming majority of cases the answer on this point is entirely plain. Of course, there are individual cases in which the coding turns out to have been wrong because in the event the child's income goes up from below £100 to above it or, which is less likely, falls back below it. But I am assured that these cases are very much the exception and not the rule.
But if for a large number of cases the tax clerk had to estimate just where in the income range stretching above £100 the child's expected income was likely to fall, it would be necessary to ask taxpayers to state beforehand the probable incomes of their children, and after the end of the year to state the actual amount. Moreover, each case would have to be re-examined by the tax office after the end of the year, and unless the estimate of the child's income had proved sufficiently accurate to make no significant difference to the allowance due, an assessment would have to be made on the child's parent, which would involve further work because of the need


either to repay any tax overpaid or to recover any tax underpaid on the basis of the original coding.

Mr. Bellenger: I am very interested in the point which the hon. Gentleman is putting. I quite appreciate the administrative difficulties. But could he tell me what the position would be of a parent whose child had an estimated income of just over £100 and, therefore, the parent was not eligible for child allowance, but, with things as they are at the moment—dividends dropping and so forth—the child's income dropped just below the £100 at the end of the year? What does the parent do then?

Sir E. Boyle: I have explained that there are individual cases in which the coding turns out to have been wrong. This matter then has to be looked at again. But I am assured—on this point I can only state what is the best advice, administratively, that I have received—that, contrary to what is suggested sometimes, these cases are very much in the minority.
I am sure that the Committee will realise from what I have said just how much the proposal would complicate the working of the P.A.Y.E. machine. It is a cardinal principle of our P.A.Y.E. system to ensure that in as wide a range of cases as possible, the correct tax is deducted from an employee's earnings in the course of his tax yeas. When this happens—I am told that it happens in about six-sevenths of all cases—no formal assessment need be made and no further work is necessary for that year.
The introduction of any tapering provisions under which in many cases the allowance could not be finally determined until the child's income for the year was known would obviously be a nuisance from the point of view of the taxpayer. It would substantially increase the work to be done by tax offices. I am assured that it would inevitably call for some hundreds of extra staff. In answer to the point raised by the hon. Member for Craigton, who firmly stated his disbelief, I have checked the matter, and it seems to me that the figures presented to the Committee some years ago really were correct.
I recognise that the hon. Member for Craigton has chosen his particular formula in the hope of meeting these administrative objections so far as possible. His formula, as he explained, divides the range of the child's income from £100 to £200 into four zones. Within each of the zones the amount of the allowance is constant even though the child's income may vary within the particular zones. I recognise that this ingenious device might certainly be expected to reduce the number of cases where the code number originally given to the parents proves in the event to be incorrect because the child's income turns out to be different from the estimate. I think it would be fair to say that, compared with the proposal by my hon. Friend, the formula of the hon. Member for Craigton would be slightly less expensive in staff, though I am told that there would not really be very much in it.
7.0 p.m.
It is not easy to make an accurate forecast when dealing with this kind of question, but the formula of the hon. Member for Craigton would not significantly alter the estimate given five years ago by my right hon. Friend the present Minister of Health to the effect that any tapering-off provision in connection with the child allowance would require approximately 450 extra staff.
I am sure that my right hon. and learned Friend the Chancellor will take full note of the strong views which have been expressed on both sides of the Committee. I am not pretending that I consider the present position at all ideal —clearly it is not. The trouble is that when looking at the formula of the hon. Member for Craigton, the saving in staff might be quite small if unforeseen changes in employment conditions made it difficult to make forecasts falling within the ranges of tolerance that the hon. Member provides. With rather wider ranges and with a tapering provision in the cases where the income is, say, between £100 and £150, it would be administratively easier but, obviously, considerably more costly.
On a combination of cost and administrative grounds, I cannot advise the Committee to accept this proposal this year. My right hon. and learned Friend will. However, take note of the views


which have been expressed. Between now and next year's Bill, we will consider both the administrative aspect and the cost aspect. If within the ambit of what may be possible in any future Finance Bill we can find a scheme which is both administratively practicable in terms of staff and not too ruinously expensive compared with other tax priorities, my right hon. and learned Friend will certainly consider it. It must, however, be recognised that what has been said in the past is correct and that I cannot this afternoon advise the Committee to accept the new Clauses.

Mr. W. Clark: Will my hon. Friend answer this question: if it is logical to apply a tapering provision £for £for dependent relative relief, why is it not logical to do it for child relief? Why are there not the same administrative difficulties in the case of the dependent relative relief?

Sir E. Boyle: I have a note about this but did not want to speak too long. I will explain why the difficulties which I have described did not prevent the tapering of the dependent relative allowance. The majority of dependent relatives have no means beyond the standard National Insurance retirement pension. In all these cases, the full allowance is due and there is no Question of any adjustment being necessary. In those cases where there is a small income from other sources—for example, a small annuity, which happens in a number of cases—again the income is fairly steady. Thus the coding on account of the dependent relative allowance which is made before the end of the year can usually prove fairly accurate. In the case of a child who is working, however, the presumption is that the income may well increase.
I do not want to enter controversial fields, but, whether we have an incomes policy or not, my hon. Friend will realise that any estimate based on facts as they are before the beginning of the tax year may well be put out by changes in the average level of earnings in a number of industries during the year. There is, however, a considerable difference between the circumstances of those who are starting work and those who are entitled to the dependent relative allowance.

Sir W. Robson Brown: When I interjected, my hon. Friend said that he would reply specifically to the problems of apprentices and their peculiar position.

The Deputy-Chairman (Sir Robert Grimston): That would arise better on a later new Clause.

Mr. Houghton: The Financial Secretary said that he had some notes of a speech and also a brief, but that he preferred to speak from the notes. I could not tell the difference. In some parts the hon. Gentleman's speech was a summary of his brief; other parts were an exact copy of it.
In a few moments, I suppose, the Committee will show the impotence of the British House of Commons. All the speeches that have been made on both sides are in favour of some concession being made. I am sure that had all other hon. Members been present they would have been of the same mind. And yet, apparently, or so it seems, the House of Commons cannot decide to make a concession on which we are all so united.
It is a pity to have to divide the Committee in such circumstances, because there is really no division in the Committee. It is a division between the Treasury Bench and the rest of the Committee. I am sorry that it may come to a Division, because so far the Financial Secretary has given no indication that he can make any concession. Since, however, he spent so much of his time on the tapering proposals, I should like to say something about them.
The hon. Gentleman believes that in theory there is something in favour of tapering provisions. Of course there is, because the Royal Commission strongly advocated their introduction into the child relief. I acknowledge that there is a good deal of work in this matter, but the Royal Commission made proposals regarding child relief which would have meant a great deal more work than this. The Commission felt, however, that it was necessary to reconstruct the relief on satisfactory lines.
The Financial Secretary will remember that not only did the Royal Commission recommend a tapering arrangement for child relief, but recommended varying the amount of relief


according to the income of the parent. That recommendation is to be found in paragraph 179 of the second Report of the Radcliffe Commission (Cmnd. 9105.)
The Commission went on to combine with that proposal a tapering plan for child relief. Some years ago, the Government decided not to accept the recommendations of paragraph 179 and not to have child relief graduated according to the income of the parent. Instead, they introduced the existing three-tier child relief of £100, £125 and £150, according to age. The Government did nothing about the tapering recommendation.
In paragraph 184, the Radcliffe Commission recommended:
Hitherto we have discussed the form of a tapering provision on the assumption that our recommendation for proportional allowances was being put in to operation. Even if it were not, we should still regard a tapering provision of some sort as a necessary improvement of the present scheme.
So that even though the Government rejected the proposals for proportional allowances, the case for tapering still remains.
In paragraph 182, the Royal Commission stated:
There is no doubt an administrative advantage in a rule so simple as this which allows the parent £85 "—
as it then was—
or nothing, but, despite our preference for simplicity in all these rules, we think that the present one is so arbitrary as to be unfair 
It is unfairness with which we are dealing.
Although there may be administrative difficulty and work in adopting a tapering provision, it is necessary sometimes for that work to be done to get fairness in the tax system. We cannot always subordinate fairness in the tax system to administrative convenience. I know that in many respects P.A.Y.E. has put a straitjacket, so to speak, on much that we would wish to do in the Income Tax system but which the P.A.Y.E. arrangements inhibit.
All that the Financial Secretary has done in regard to the proposed tapering arrangement is to say that the Chancellor will take note of it. I can quite understand it if he regards the proposal of the hon. Member for Nottingham, South (Mr. W. Clark) as less acceptable than

the proposal of my hon. Friend the Member for Glasgow, Craigton (Mr. Milan) because it so happens that in paragraph 183 of the Report of the Radcliffe Commission, from which I quoted, there was a criticism of the £for £tapering arrangement. I quote again from that paragraph:
On the whole we think that the simple rule of reducing the allowance otherwise due by £1 for every £of the child's income would be unsuitable, for it would involve a great deal of work, much of it fruitless, in checking all children's incomes and any increase in a child's income, such as may well happen when employment begins, would result in underpayment of tax by the parent, needing to be recouped later under P.A.Y.E. or otherwise.
The proposal of my hon. Friend the Member for Craigton was not, of course, considered by the Commission because it was working out its tapering arrangement on a different basis.
The Financial Secretary is always given the unpleasant tasks in discussions on the Finance Bill. He promised again that the Chancellor will consider this matter for another year. Last year he promised that personal reliefs as a whole would be reconsidered. He was hopeful then that we should see the outcome of further consideration of the whole pattern of personal allowances. The years go by and we do not come to this matter. Nothing has been done about personal allowances generally since 1955 and nothing has been done about child relief since 1957. When can we expect to have these reforms considered and brought to the House?
I now turn to the proposal introduced in the new Clause in my name—on a very narrow point, as I explained. It deals with a particular grievance which I do not think any tapering arrangement would entirely do away with, that of earnings in the first year on leaving school. It is one which I think appeals to everyone's sense of fairness. There is no algebra about it, no proportions about it, and no complications about it. It is simple; we just ignore the child's earned income for the year when the child leaves school. That would appeal to people as being simple as well as fair.
The hon. Member for Brighouse and Spenborough (Mr. Shaw) said that he would have approved of this new Clause far more had it provided for a child giving up full-time extended education. The new Clause was intended to cover


that. It certainly introduces the word "school" which I do not believe is to be found in the Income Tax Act. The Income Tax Act calls a school "an educational establishment". I have no objection to substituting the words "an educational establishment" for the word "school" in the new Clause if that would make it more comprehensive and more understandable. Certainly it was intended that whenever the child leaves school the earnings of the child should be ignored for tax purposes.

7.15 p.m.

Mr. Shaw: In fact the word "school" is mentioned in the Act, but among many other things. The Act says:
receiving full-time instruction in a university, college. school or other educational establishment.

Mr. Houghton: That shows that there are not the difficulties about the word school "which the hon. Member appeared to find. I think we can agree that this new Clause is intended to cover school, academy, university or any other educational establishment.
The hon. Member for Heywood and Royton (Mr. Leavey) asked, what about children who might leave school on the day after the beginning of the tax year? The parent would then be able to ignore the child's earnings for the whole of the rest of the tax year. I do not think that marginal case need trouble the Committee. In all cases if a parent were arranging the affairs of the child suited best to his own tax liability the probability is that that would extend and not shorten the child's stay at school. In any case there are marginal anomalies, if one could call them that, in many other reliefs now provided for under the Income Tax Acts. They are there because it is far too much trouble to erect the apparatus necessary to restrain people from getting an undue advantage.
The hon. Member for Brighouse and Spenborough referred to the fact that a single woman getting married during the tax year still has her personal allowance for a full year set off against her earnings as a single woman. Then, the day after she marries, she is entitled to the special earned income relief for married women for the whole year to he set off against her earnings as a

married woman. If she arranges to get married about the month of October and stays at work, she gets one full set of reliefs before the date of marriage and another, and reduced rate reliefs as well, after her marriage—both within the tax year. In addition, the husband gets a married man's allowance for the whole year. There is no doubt that a very large tax bounty is given to newly-weds who know the way around the Income Tax Act.
Also, a child born on the last day of the tax year qualifies the parent for a tax relief for the whole year. A great deal of the agitation in prospective fathers in the latter days of March and the early days of April is not only anxiety for the welfare of the mother and child, but rather wondering whether the child will be born before midnight on 5th April. If it is born one minute before midnight he gets tax relief on £100 according to the rate of tax he pays, and it may be £100 at 7s. 9d. He qualifies for Surtax relief as well where that would be appropriate. These anomalies are accepted as part of the rough and tumble of the Income Tax Act. Those who can arrange their affairs in a way to get the best advantage do not find that the Chancellor is churlish. He does not come to the House and propose anti-avoidance measures and things of that kind. I see no reason why it should be done in a case of this kind.
We are most disappointed with the reply by the Financial Secretary. It will be necessary to ask the Committee to take a little more notice of his unfavourable reply than by just bottling up our disappointment and passing on to the next business. It is too bad that the united wish of the Committee cannot prevail. What is the good of showing our schoolchildren around the Palace of Westminster and saying to our friends from colonial legislatures, "Here is the Mother of Parliaments. This is where power rests supreme in the hands of the people" and so on, when here we are wanting a very small concession but apparently the party system, the Whips and everything else combine to frustrate the will of Parliament?
I think the Financial Secretary has taken upon himself a much bigger responsibility than he should have. He


is undermining the prestige of Parliament as well as rejecting a perfectly reasonable new Clause.

Division No. 205.]
AYES
[7.20 p.m.


Abse, Leo
Hamilton, William (West Fife)
Pavitt, Laurence


Ainsley, William
Harper, Joseph
Pearson, Arthur (Pontypridd)


Albu, Austen
Hart, Mrs. Judith
Peart, Frederick


Allaun, Frank (Salford, E.)
Hayman, F. H.
Pentland, Norman


Allen, Scholefield (Crewe)
Henderson, Rt.Hn.Arthur (RwlyRegis)
Price, J. T. (Westhoughton)


Baird, John
Hewitson, Capt. M.
Probert, Arthur


Bennett, J. (Glasgow, Bridgeton)
Holman, Percy
Proctor, W. T.


Benson, Sir George
Hooson, A. E.
Randall, Harry


Blackburn, F.
Houghton, Douglas
Rankin, John


Blyton, William
Howell, Denis (Small Heath)
Roberts, Albert (Normanton)


Boardman, H.
Hoy, James H.
Roberts, Coronwy (Caernarvon)


Bowden, Rt. Hn. H. W.(Leics, S.W.)
Hughes, Cledwyn (Anglesey)
Robertson, John (Paisley)


Bowles, Frank
Hughes, Emrys (S. Ayrshire)
Rodgers, W. T. (Stockton)


Boyden, James
Hunter, A. E.
Rogers, G. H. R. (Kensington, N.)


Brockway, A. Fenner
Irvine, A. J. (Edge Hill)
Ross, William


Brougtiton, Dr. A. D. D.
Irving, Sydney (Darttord)
Short, Edward


Brown, Rt. Hon. George (Belper)
Jenkins, Roy (Stechford)
Silverman, Julius (Aston)


Brown, Thomas (Ince)
Johnson, Carol (Lewisham, S.)
Silverman, Sydney (Nelson)


Butler, Herbert (Hackney, C.)
Jones, Dan (Burnley)
Skeffington, Arthur


Callaghan, James
Jones, Jack (Rotherham)
Slater, Mrs. Harriet (Stoke, N.)


Castle, Mrs. Barbara
Jones, J. Idwal (Wrexham)
Slater, Joseph (Sedgefield)


Chapman, Donald
Jones, T. W. (Merioneth)
Smith, Ellis (Stoke, S.)


Collick, Percy
Kelley, Richard
Soskice, Rt. Hon. Sir Frank


Craddock, George (Bradford, S.)
Kenyon, Clifford
Spriggs, Leslie


Crossman, R. H. S.
Key, Rt. Hon. C. W.
Steele, Thomas


Cullen, Mrs. Alice
Lawson, George
Stewart, Michael (Fulham)


Darling, George
Ledger, Ron
Stonehouse, John


Davies, G. Elfed (Rhondda, E.)
Lee, Frederick (Newton)
Stones, William


Davies. Harold (Leek)
Lever, L. M. (Ardwick)
Strachey, Rt. Hon. John


Davies, S. O. (Merthyr)
Lewis, Arthur (West Ham, N.)
Stross, Dr.Barnett (Stoke-on-Trent,C.)


Deer, George
Loughlin, Charles
Swingler, Stephen


Delargy, Hugh
Mabon, Dr. J. Dickson
Taylor, Bernard (Mansfield)


Diamond, John
Mclnnes, James
Thornton, Ernest


Driberg, Tom
McKay, John (Wallsend)
Timmons, John


Ede, Rt. Hon. C.
McLeavy, Frank
Tomney, Frank


Edwards, Rt. Hon. Ness (Caerphilly)
MacPherson, Malcolm (Stirling)
Wade, Donald


Edwards, Robert (Bilston)
Mallalleu, J.P.W. (Huddersfield, E.)
Wainwright, Edwin


Edwards, Walter (Stepney)
Manuel, Archie
Warbey, William


Evans, Albert
Mayhew, Christopher
Watkins, Tudor


Finch, Harold
Millan, Bruce
Weitzman, David


Fitch, Alan
Mitchison, G. R.
Wells, Percy (Faversham)


Fletcher, Eric
Monslow, Walter
Wells, William (Walsall, N.)


Forman, J. C.
Moody, A. S.
Willey, Frederick


Fraser, Thomas (Hamilton)
Morris, John
Williams, D. J. (Neath)


Gaitskell, Rt. Hon. Hugh
Moyle, Arthur
Williams, LI. (Abertillery)


Galpern, Sir Myer
Mulley, Frederick
Williams, W. T. (Warrington)


Ginsburg, David
Oliver, G. H.
Willis, E. G. (Edinburgh, E.)


Gordon Walker, Rt. Hon. P. C.
Oram, A. E.
Wilson, Rt. Hon. Harold (Huyton)


Gourlay, Harry
Oswald, Thomas
Woof, Robert


Grey, Charles
Owen, Will
Yates, Victor (Ladywood)


Griffiths, David (Rother Valley)
Padley, W. E.



Griffiths, Rt. Hon. James (Llanelly)
Pannell, Charles (Leeds, W.)
TELLERS FOR THE AYES:


Griffiths, W. (Exchange)
Pargiter, G. A.
Mr. Charles A. Howell and


Hale, Leslie (Oldham, W.)
Parker, John
Mr. Redhead.


Hall, Rt. Hn. Glenvil (Cotne Valley)
Parkin, B. T.





NOES


Agnew, Sir Peter
Bishop, F. P.
Carr, Robert (Mitcham)


Aitken, W. T.
Black, Sir Cyril
Chichester-Clark, R.


Allan, Robert (Paddington, S.)
Bourne-Arton, A.
Clark, Henry (Antrim, N.)


Allason, James
Box, Donald
Clarke, Brig. Terence(Portsmth, W.)


Arbuthnot, John
Boyd-Carpenter, Rt. Hon. John
Cleaver, Leonard


Ashton, Sir Hubert
Boyle, Sir Edward
Cole, Norman


Atkins, Humphrey
Braine, Bernard
Cooke, Robert


Barber, Anthony
Brewis, John
Cooper, A. E,


Barlow, Sir John
Brooke, Rt. Hon. Henry
Cordeaux, Lt.-Col. J. K.


Barter, John
Brooman-White, R.
Corfield, F. V.


Batsford, Brian
Brown, Alan (Tottenham)
Costain, A, P.


Beamish, Col. Sir Tufton
Browne, Percy (Torrington)
Coulson, Michael


Bell, Ronald
Bullard, Denys
Courtney, Cdr. Anthony


Berkeley, Humphry
Bullus, Wing Commander Eric
Craddock, Sir Beresford


Bidgood, John C.
Burden, F. A.
Crosthwaite-Eyre, Col. Sir Oliver


Biffen, John
Butler, Rt.Hn.R.A. (Saffron Walden)
Crowder, F. P.


Bingham, R. M.
Campbell, Gordon (Moray &amp; Nairn)
Cunningham, Knox


Birch, Rt. Hon. Nigel
Carr, Compton (Barons Court)
Curran, Charles

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 160, Noes 223.

Currie, G. B. H.
Lancaster, Col. C. C.
Prior, J. M. L.


Dalkeith, Earl of
Langford-Holt, Sir John
Prior-Palmer, Brig. Sir Otho


Dance, James
Leather, E. H. C.
Profumo, Rt. Hon. John


d'Avigdor-Goldsmid, Sir Henry
Legge-Bourke, Sir Harry
Proudfoot, Wilfred


Deedes, W. F.
Lewis, Kenneth (Rutland)
Pym, Francis


de Ferranti, Basil
Litchfield, Capt. John
Quennell, Miss J. M.


Digby, Simon Wingfield
Lloyd, Rt.Hn. Geoffrey (Sut'nC'dfleld)
Rawlinson, Peter


Donaldson, Cmdr. C. E. M.
Lloyd, Rt. Hon. Selwyn (Wirral)
Redmayne, Rt. Hon. Martin


Drayson, G. B.
Loveys, Walter H.
Renton, David


du Cann, Edward
Lucas, Sir Jocelyn
Ridley, Hon. Nicholas


Elliot, Capt. Walter (Carshalton)
Lucas-Tooth, Sir Hugh
Rodgers, John (Sevenoaks)


Elliott, R. w. (Nwcastle-upon-Tyne, N.)
McAdden, Stephen
Roots, William


Errington, Sir Eric
MacArthur, Ian
Russell, Ronald


Farey-Jones, F. W.
McLaren, Martin
Scott-Hopkins, James


Farr, John
McLaughlin, Mrs. Patricia
Shepherd, William


Finlay, Graeme
Maclay, Rt. Hon. John
Skeet, T. H. H.


Fisher, Nigel
Maclean, Sir Fitzroy (Bute &amp; N. Ayrs.)
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Fraser, lan (Plymouth, Sutton)
Macleod, Rt. Hn. lain (Enfield, w.)
Smyth, Brig. Sir John (Norwood)


Freeth, Denzil
MacLeod, John (Ross &amp; Cromarty)
Spearman, Sir Alexander


Galbraith, Hon. T. G. D.
Macmillan, Maurice (Halifax)
Stanley, Hon. Richard


Gammans, Lady
Macpherson, Niall (Dumfries)
Stevens, Geoffrey


Gilmour, Sir John
Maitland, Sir John
Steward, Harold (Stockport, S.)


Goodhart, Philip
Manningham-Buller, Rt. Hn. Sir R.
Stodart, J. A.


Goodhew, Victor
Markham, Major Sir Frank
Stoddart-Scott, Col. Sir Malcolm


Gower, Raymond
Marlowe, Anthony
Storey, Sir Samuel


Grant, Rt. Hon. William
Marshall, Douglas
Studholme, Sir Henry


Grant-Ferris, Wg. Cdr. R.
Marten, Neil
Tapsell, Peter


Green, Alan
Matthews, Gordon (Meriden)
Taylor, Sir Charles (Eastbourne)


Hall, John (Wycombe)
Maxwell-Hyslop, R. J.
Taylor, Frank (M'ch'st'r, Moss Side)


Hamilton, Michael (Wellingborough)
Maydon, Lt.-Cmdr. S. L. C.
Teeling, Sir William


Harris, Frederic (Croydon, N.W.)
Mills, Stratton
Temple, John M.


Harris, Reader (Heston)
Miscampbell, Norman
Thatcher, Mrs. Margaret


Harrison, Brian (Maidon)
Montgomery, Fergus
Thomas, Leslie (Canterbury)


Harvie Anderson, Miss
More, Jasper (Ludlow)
Thompson, Kenneth (Walton)


Hastings, Stephen
Morgan, William
Thornton-Kemsley, Sir Colin


Hay, John
Morrison, John
Tiley, Arthur (Bradford, W.)


Heald, Rt. Hon. Sir Lionel
Mott-Radclyffe, Sir Charles
Touche, Rt. Hon. Sir Gordon


Hinchingbrooke, Viscount
Nabarro, Gerald
Turner, Colin


Hirst, Geoffrey
Neave, Airey
Turton, Rt. Hon. R. H.


Hocking, Philip N.
Nicholson, Sir Godfrey
van Straubenzee, W. R.


Holland, Philip
Noble, Michael
Vane, W. M. F.


Hollingworth John
Nugent, Rt. Hon. Sir Richard
Vosper, Rt. Hon. Dennis


Hornby, R. P.
Oakshott, Sir Hendrie
Wakefield, Sir Wavell


Hornsby-Smith, Rt. Hon. Dame P.
Osborn, John (Hallam)
Walker, Peter


Howard, John (Southampton, Test)
Osborne, Sir Cyril (Louth)
Wells, John (Maidstone)


Hughes Hallett, Vice-Admiral John
Page, Graham (Crosby)
Williams, Dudley (Exeter)


Hughes-Young, Michael
Pannell, Norman (Kirkdale)
Williams, Paul (Sunderland, S.)


Hurd, Sir Anthony
Pearson, Frank (Clitheroe)
Wills, Sir Gerald (Bridgwater)


Hutchison, Michael Clark
Peel, John
Wilson, Geoffrey (Truro)


Irvine, Bryant Godman (Rye)
Percival, Ian
Wise, A. R.


Johnson, Eric (Blackley)
Pickthorn, Sir Kenneth
Wolrige-Gordon, Patrick


Johnson Smith, Geoffrey
Pilkington, Sir Richard
Worsley, Marcus


Jones, Rt. Hn. Aubrey (Hall Green)
Pitman, Sir James
Yates, William (The Wrekin)


Kerans, Cdr. J. S.
Pitt, Miss Edith



Kerby, Capt. Henry
Pott, Percivall



Kimball, Marcus
Powell, Rt. Hon. J. Enoch
TELLERS FOR THE NOES:


Lagden, Godfrey
Price, David (Eastleigh)
Mr. Whitelaw and Mr. Rees.


Lambton, Viscount
Price, H. A. (Lewisham, W.)

New Clause.—(INCREASE OF RELIEF IN RESPECT OF CHILDREN NOT OVER THE AGE OF ELEVEN.)

(1) In subsection (1) (a) of section two hundred and twelve of the Act of 1952 (amounts of relief in respect of children) for the reference to one hundred pounds there shall be substituted a reference to one hundred and ten pounds.

(2) This section shall not be deemed to have required any change in the amounts deducted

Division No. 206.]
AYES
[7.29 p.m.


Abse, Leo
Blyton, William
Callaghan, James


Ainsley, William
Boardman, H.
Castle, Mrs. Barbara


Albu, Austen
Bowden, Rt. Hn.H.W. (Leics. S.W.)
Chapman, Donald


Allaun, Frank (Salford, E.)
Bowles, Frank
Collick, Percy


Allen, Scholefield (Crewe)
Boyden, James
Craddock, George (Bradford, S.)


Baird, John
Brockway, A. Fenner
Crossman, R. H. S.


Bennett, J, (Glasgow, Bridgeton)
Broughton, Dr. A. D. D.
Cullen, Mrs. Alice


Benson, Sir George
Brown, Rt, Hon. George (Belper)
Darling, George


Blackburn, F.
Butler, Herbert (Hackney, C.)
Davies, G. Elfed (Rhondda, E.)

or repaid under section one hundred and fifty-seven (pay as you earn) of the Act of 1952 before the twenty-second day of June, nineteen hundred and sixty-two.—[Mr. Mitchison.]

Brought up, and read the First time.

Motion made, and Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 158, Noes 228.

Davits, Harold (Leek)
Jones, Dan (Burnley)
Roberts, Albert (Normanton)


Davies, S. O. (Merthyr)
Jones, Jack (Rotherham)
Roberts, Goronwy (Caernarvon)


Deer, George
Jones, J. Idwal (Wrexham)
Robertson, John (Paisley)


Delargy, Hugh
Jones, T. W. (Merioneth)
Rodgers, W. T. (Stockton)


Diamond, John
Kelley, Richard
 Rogers, G. H. R. (Kensington, N.)


Driberg, Tom
Kenyon, Clifford
Ross, William


Ede, Rt. Hon. C.
Key, Rt. Hon. C. W.
Short, Edward


Edwards, Rt. Hon. Nest (Caerphilly)
Lawson, George
Silverman, Julius (Aston)


Edwards, Robert (Bilston)
Ledger, Ron
Silverman, Sydney (Nelson)


Edwards, Walter (Stepney)
Lee, Frederick (Newton)
Skeffington, Arthur


Evans, Albert
Lever, L. M. (Ardwick)
Slater, Mrs. Harriet (Stoke, N.)


Finch, Harold
Lewis, Arthur (West Ham, N.)
Slater, Joseph (Sedgefield)


Fitch, Alan
Loughlin, Charles
Smith, Ellis (Stoke, S.)


Fletcher, Eric
Mabon, Dr. J. Dickson
Soskice, Rt. Hon. Sir Frank


Forman, J. C.
Mclnnes, James
Spriggs, Leslie


Fraser, Thomas (Hamilton)
McKay, John (Wallsend)
Steele, Thomas


Gaitskell, Rt. Hon. Hugh
McLeavy, Frank
Stewart, Michael (Fulham)


Galpern, Sir Myer
MacPherson, Malcolm (Stirling)
Stonehouse, John


Ginsburg, David
Mallalieu, J.P.W. (Huddersfield, E.)
Stones, William


Gordon Walker, Rt. Hon. P. C.
Manuel, Archie
Strachey, Rt. Hon. John


Gourlay, Harry
Mayhew, Christopher
Stross, Dr.Barnett (Stoke-on-Trent,C.)


Grey, Charles
Millan, Bruce
Swingler, Stephen


Griffiths, David (Rother Valley)
Mitchison, G. R.
Taylor, Bernard (Mansfield)


Griffiths, Rt. Hon. James (Llanelly)
Monslow, Walter
Thornton, Ernest


Griffiths, W. (Exchange)
Moody, A. S.
Timmons, John


Hale, Leslie (Oldham, W.)
Morris, John
Tomney, Frank


Hall, Rt. Hn. Glenvil (Colne Valley)
Moyle, Arthur
Wade, Donald


Hamilton, William (West Fife)
Mulley, Frederick
Wainwright, Edwin


Harper, Joseph
Oliver, G. H.
Warbey, William


Hart, Mrs. Judith
Oram, A. E.
Watkins, Tudor


Hayman, F. H.
Oswald, Thomas
Weitzman, David


Henderson, Rt. Hn. Arthur (Rwly Regis)
Owen, Will
Wells, Percy (Faversham)


Hewitson, Capt. M.
Padley, w. E.
Wells, William (Walsall, N.)


Holman, Percy
Pannell, Charles (Leeds, W.)
Willey, Frederick


Hooson, H. E.
Pargiter, G. A.
Williams, D. J. (Neath)


Houghton, Douglas
Parker, John
Williams, LI. (Abertillery)


Howell, Denis (Small Heath)
Parkin, B. T.
Williams, W. T. (Warrington)


Hoy, James H.
Pearson, Arthur (Pontypridd)
Willis, E. G. (Edinburgh, E.)


Hughes, Cledwyn (Anglesey)
Peart, Frederick
Wilson, Rt. Hon. Harold (Huyton)


Hughes, Emrys (S. Ayrshire)
Pentland, Norman
Woof, Robert


Hunter, A. E.
Price, J. T. (Weuthoughton)
Yates, Victor (Ladywood)


Irvine, A. J. (Edge Hill)
Probert, Arthur



Irving, Sydney (Dartford)
Proctor, W. T.
TELLERS FOR THE AYES:


Jenkins, Roy (Stechford)
Randall, Harry
Mr. Charles A. Howell and


Johnson, Carol (Lewisham, S.)
Rankin, John
Mr. Redhead.




NOES


Agnew, Sir Peter
Clark, William (Nottingham, S.)
Gilmour, Sir John


Aitken, W. T.
Clarke, Brig. Terence (Portsmth,W.)
Goodhart, Philip


Allan, Robert (Paddington, S.)
Cleaver, Leonard
Goodhew, Victor


Allason, James
Cole, Norman
Gower, Raymond


Arbuthnot, John
Cooke, Robert
Grant, Rt. Hon. William


Ashton, Sir Hubert
Cooper, A. E.
Grant-Ferris, Wg. Cdr. R.


Atkins, Humphrey
Cordeaux, Lt.-Col. J. K.
Green, Alan


Barber, Anthony
Corfield, F. V.
Hall, John (Wycombe)


Barlow, Sir John
Costain, A. P.
Hamilton, Michael (Wellingborough)


Barter, John
Coulson, Michael
Harris, Frederic (Croydon, N.W.)


Batsford, Brian
Courtney, Cdr. Anthony
Harris, Reader (Heston)


Beamish, Col. Sir Tufton
Craddock, Sir Beresford
Harrison, Brian (Maidon)


Bell, Ronald
Crosthwaite-Eyre, Col. Sir Oliver
Harvie Anderson, Miss


Berkeley, Humphry
Crowder, F. P.
Hastings, Stephen


Bidgood, John C.
Cunningham, Knox
Hay, John


Biffen, John
Curran, Charles
Heald, Rt. Hon. Sir Lionel


Bingham, R. M.
Currie, G. B. H.
Hill, J. E. B. (S. Norfolk)


Birch, Rt. Hon. Nigel
Dalkeith, Earl of
Hinchingbrooke, Viscount


Bishop, F. P.
Dance, James
Hirst, Geoffrey


Black, Sir Cyril
d' Avigdor-Goldsmid, Sir Henry
Hocking, Philip N.


Bourne-Arton, A.
Deedes, W. F.
Holland, Philip


Box, Donald
de Ferranti, Basil
Hollingworth, John


Boyd-Carpenter, Rt. Hon. John
Digby, Simon Wingfield
Hornby, R. P.


Boyle, Sir Edward
Donaldson, Cmdr. C. E. M.
Hornsby-Smith, Rt. Hon. Dame P.


Braine, Bernard
Drayson, G. B.
Howard, John (Southampton, Test)


Brewls, John
du Cann, Edward
Hughes Hallett, Vice-Admiral John


Brooke, Rt. Hon. Henry
Elliot, Capt. Walter (Carshalton)
Hughes-Young, Michael


Brooman-White, R.
Elliott, R.W.(Nwcastle-upon-Tyne, N.)
Hurd, Sir Anthony


Brown, Alan (Tottenham)
Errington, Sir Eric
Hutchison, Michael Clark


Browne, Percy (Torrington)
Farey-Jones, F. W.
Irvine, Bryant Godman (Rye)


Bullus, Wing Commander Eric
Farr, John
Johnson, Eric (Blackley)


Burden, F. A.
Finlay, Graeme
Jones, Rt. Hn. Aubrey (Hall Green)


Butler, Rt.Hn.R.A. (Saffron Walden)
Fisher, Nigel
Kerans, Cdr. J, S.


Campbell, Cordon (Moray &amp; Nairn)
Fraser, Ian (Plymouth, Sutton)
Kerby, Capt. Henry


Carr, Compton (Barons Court)
Freeth, Denzil
Kimball, Marcus


Carr, Robert (Mitcham)
Galbraith, Hon. T. G. D.
Lagden, Godfrey


Clarke, Henry (Antrim, N.)
Gammans, Lady
Lambton, Viscount

Lancaster, Col. C. G.
Noble, Michael
Spearman, Sir Alexander


Langford-Holt, Sir John
Nugent, Rt. Hon. Sir Richard
Stanley, Hon. Richard


Leather, E. H. C.
Oakshott, Sir Hendrie
Stevens, Geoffrey


Legge-Bourke, Sir Harry
Osborn, John (Hallam)
Steward, Harold (Stockport, S.)


Lewis, Kenneth (Rutland)
Osborne, Sir Cyril (Louth)
Stodart, J. A.


Litchfield, Capt. John
Page, Graham (Crosby)
Stoddart-Scott, Col. Sir Malcolm


Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Pannell, Norman (Kirkdale)
Storey, Sir Samuel


Lloyd, Rt. Hon. Selwyn (Wirral)
Partridge, E.
Studholme, Sir Henry


Loveys, Walter H.
Pearson, Frank (Clitheroe)
Tapsell, Peter


Lucas, Sir Jocelyn
Percival, Ian
Taylor, Sir Charles (Eastbourne)


Lucas-Tooth, Sir Hugh
Pickthorn, Sir Kenneth
Taylor, Frank (M'ch'st'r, Moss Side)


McAdden, Stephen
Pilkington, Sir Richard
Teeling, Sir William


MacArthur, Ian
Pitman, Sir James
Temple, John M.


McLaren, Martin
Pitt, Miss Edith
Thatcher, Mrs. Margaret


McLaughlin, Mrs. Patricia
Pott, Percivall
Thomas, Leslie (Canterbury)


Maclay, Rt. Hon. John
Powell, Rt. Hon. J. Enoch
Thompson, Kenneth (Walton)


Maclean, Sir Fitzroy(Bute&amp;N.Ayra.)
Price, David (Eastleigh)
Thornton-Kemsley, Sir Colin


Macleod, Rt. Hn. lain (Enfield, W.)
Price, H. A. (Lewisham, W.)
Tiley, Arthur (Bradford, W.)


MacLeod, John (Ross &amp; Cromarty)
Prior, J. M. L.
Touche, Rt. Hon. Sir Gordon


Macmillan, Maurice (Halifax)
Prior-Palmer, Brig. Sir Otho
Turner, Colin


Macpherson, Niall (Dumfries)
Profumo, Rt. Hon. John
Turton, Rt. Hon. R. H.


Maitland, Sir John
Proudfoot, Wilfred
van Straubenzee, W. R.


Manningham-Buller, Rt. Hn. Sir R.
Pym, Francis
Vane, W. M. F.


Markham, Major Sir Frank
Quennell, Miss J. M.
Vosper, Rt. Hon. Dennis


Marlowe, Anthony
Rawlinson, Peter
Wakefield, Sir Wavell


Marshall, Douglas
Redmayne, Rt. Hon. Martin
Walker, Peter


Marten, Nell
Rees, Hugh
Wells, John (Maidstone)


Matthews, Gordon (Meriden)
Renton, David
Whitelaw, William


Maxwell-Hyslop, R. J.
Ridley, Hon. Nicholas
Williams, Dudley (Exeter)


Maydon, Lt.-Cmdr. S. L. C.
Roberts, Sir Peter (Heeley)
Williams, Paul (Sunderland, S.)


Mills, Stratton
Rodgers, John (Sevenoaks)
Wills, Sir Gerald (Bridgwater)


Miscampbell, Norman
Roots, William
Wilson, Geoffrey (Truro)


Montgomery, Fergus
Russell, Ronald
Wise, A. R.


More, Jasper (Ludlow)
Scott-Hopkins, James
Wolrige-Gordon, Patrick


Morgan, William
Seymour, Leslie
Worsley, Marcus


Morrison, John
Shaw, M.
Yates, William (The Wrekin)


Mott-Radclyffe, Sir Charles
Shepherd, William



Nabarro, Gerald
Skeet, T. H. H.
TELLERS FOR THE NOES:


Neave, Airey
Smith, Dudley (Br'ntf'd &amp; Chiswick)
Mr. Chichester-Clark and


Nicholson, Sir Godfrey
Smyth, Brig. Sir John (Norwood)
Mr. Peel.

New Clause.—(RELIEF IN RESPECT OF APPRENTICES AND TECHNICAL EDUCATION.)

(1) Section one hundred and forty of the Income Tax Act, 1952 (Payment for technical education), shall apply to a payment of wages made to an apprentice of the claimant, being an apprentice undergoing, whether in the place of business of the claimant or elsewhere, a course of instruction approved by the Commissioners after consultation with the Industrial Training Council, as it applies to such a payment as is mentioned in that section.

(2) Where by virtue of the said section one hundred and forty or of the said section as applied by the last foregoing subsection a payment may be deducted as an expense in computing the profits or gains of a trade for the purposes of income tax, there may be made in addition to that deduction a further deduction equal to one third of the first-mentioned deduction and the said section one hundred and forty shall apply to that further deduction as it applies to the first-mentioned deduction.

(3) This section shall not apply in relation to more than five persons in respect of whom the claimant makes such payments as are mentioned in the said section one hundred and forty or in subsection (1) of this section.

(4) Nothing in this section shall affect any deduction from the profits or gains of a trade which may be made for the purposes of income tax otherwise than by virtue of this section:

Provided that the same deduction shall not be made both by virtue of this section and otherwise.—[Mr. Albu.]

Brought up, and read the First time.

Mr. Austen Albu: I beg to move, That the Clause be read a Second time.

The Deputy-Chairman: With this Clause it would be convenient to discuss the new Clause —Professional payments to educational establishments.

Mr. Albu: That will be convenient, Sir Robert. This Clause deals with relief in respect of apprentices. Section 140 of the Income Tax Act, 1952, relates to payments made by a firm to a technical college or to a university on behalf of its employees, mainly apprentices. This is not the first time that this Clause has been moved but, as we know, it is sometimes a case of second or third time lucky. I am very glad to see the Parliamentary Secretary to the Ministry of Labour present tonight. The purpose of the Clause is two-fold. The first purpose is to put up the relief to one and one-third times the payment made. The second purpose is to extend the relief at the higher rate—that is to say, at one and one-third—to the wages paid to an apprentice undergoing an approved course of instruction, whether in a works or, with the increasing number of commercial apprentices, even in an office,


In other words, whereas at present the relief is extended to payments made to technical colleges and universities—of course, there is ordinary relief for the ordinary wages—the Clause increases the amount of relief to one and one-third both for wages and for payments made to educational institutions.
We have limited the number of apprentices who will be covered in this way to five, the intention being to provide the greatest incentive to the small firms, where it is generally considered that the need is greatest. Nobody doubts our need for more skilled workers, and in the last few years continuing discussions have been going on both about the number of apprentices and the quality of apprentice training. On several occasions we have pressed the Government to take advantage of the bulge coming out of the schools so as to be able to train the greater number of skilled workers that most of us think will be needed in the future. The Ministry of Labour has been having discussions with both sides of industry about the form that apprenticeships should take.
In recent months there has been a slight rise in the overall numbers of those undergoing what are called apprenticeships or learnerships—although I do not know much about their quality—but it is really only proportionate to the rise in age groups. It is certainly not happening at a sufficiently fast rate to take account of the urgent needs of the country. The recent study made by the Ministry of Labour of the composition of the unemployed and all other existing information shows that there is still a great need for more skilled workers in many trades.
But this is not merely the current situation. Most of us believe that, with the changing composition of industry, the need to use our technological lead as other countries develop their own industries, and the need to increase our exports, especially of capital goods, in highly scientific fields, the number of skilled workers required will be greater than can be measured merely by extrapolating the present trend. This was the mistake made by the Committee on Scientific Manpower, and this mistake is also made by those who attempt to

discover what will be the need for skilled workers. The trend will rise very rapidly in the next few years.
It is generally believed that it is the small firms which are not doing their share, and it is therefore slightly surprising to find, in the recent report published by the Engineering Employers' Federation on Recruitment and Training of Young Persons in the Engineering Industry—where they have divided the ratio of apprentices to skilled workers according to the size of the firm—that there is an inverse ratio between the size of the firm and the number of apprentices. The ratio of apprentices to skilled men is highest in the small firms and becomes progressively lower as the firms become bigger.

The Parliamentary Secretary to the Ministry of Labour (Mr. Alan Green): indicated assent.

Mr. Albu: I see that the Parliamentary Secretary nods his head. That is a surprising result—so surprising that I suspect that the hon. Gentleman is as suspicious of the figures as I am. I suspect that the real truth is that in the small firms many apprentices are receiving little or no training, and are in fact being used merely as cheap labour. Certainly the large engineering firms which have elaborate training schemes, with training workshops, proper instructors and proper courses, have said in recent years that they are doing as much as they possibly can do to train skilled workers, and that they lose these skilled workers to the smaller firms, which do not provide the same amount of training. I suspect that the reason for these figures is that the larger firms provide very good training and produce very highly skilled workers, whereas the training received in many smaller firms is minimal.
The same report makes it clear that only just over one-third of the workers in the appropriate age group—that is to say, 16—are attending a works school in a proper training workshop. It is generally agreed that in engineering and many similar industries it is essential to obtain as many apprentices as possible for initial training in a workshop, under properly qualified instructors, if the subsequent apprentice training is to be really good. It is the only way in which


good habits of work can be learned—quite apart from the theoretical instruction—and it provides the best and most up-to-date method of ensuring that the processes carried on in the trade can be learned.
7.45 p.m.
I am certain that the early months which a young man spends in industry very much determine his attitude to work for the rest of his life, apart altogether from the quality and skill which he acquires. This is also shown in the report. There is a very high level of wastages from apprenticeships, especially in the early months. The reason given in the report is not that the apprentices are generally unsuitable, but that they become "browned-off";they do not know where they are going, and do not get any lead—and they probably get no instruction.
This is a serious matter. It is all very well to have a large number of people claiming that they are receiving apprenticeships; but many of these figures are based on what the small employers or the apprentices themselves say. An apprentice may say, "I am serving an apprenticeship", when it is probably not an apprenticeship at all. If the figures are also inflated by a high degree of wastage—or, rather, if the higher figures are deflated by a high degree of wastage—we are losing, and the total number coming out at the end will be less than anticipated.
Small firms may not be able to afford proper training workshops or works schools, and they certainly cannot afford qualified instructors, but they should be encouraged to use the training workshops in Ministry of Labour training centres and training colleges where these are provided. I am talking not of the pre-apprenticeship period but of the first months or the first year of the apprenticeship. The unions are becoming increasingly aware of the fact that this is part of the apprenticeship.
I heard a very interesting discussion on the subject this year, at Folkestone, by the National Committee of the Amalgamated Engineering Union. That union is by no means the least militant, or the most pliable, but it is becoming extremely flexible in its attitude towards apprenticeships, and now realises that with the changing pattern of technologi-

cal needs it may be necessary also to change the pattern of apprenticeships. It is prepared to recognise that the time spent in training in a workshop outside the firm can be counted towards the apprenticeship. In passing, before I am called to order, I should say that this will need a larger number of trained craft instructors than now exist.
The new Clause would allow relief in respect of apprentices in technical education only for a course of instruction approved by the Commissioners after consultation with the Industrial Training Council. I inserted that provision because this Council is the best that there is at the moment. If it were given this function it might well develop some real authority. This would enable the Government not only to increase the number of apprenticeships because of the incentive given, but also to improve the quality of apprentice training because the relief would not be given unless the training were approved.
I consider this matter to be extremely urgent. Although in this country we have some outstanding apprenticeship schemes, and some firms have done outstanding work, generally speaking the level is probably inferior to that in most European countries. At the recent conference on the subject held by the British Association for Commercial and Industrial Education it was almost unanimously agreed that there was a need for some body to control the standards of apprentice training. It was felt that it could no longer be left to individual firms to call something a training and aprenticeship which in fact covered no systematic or formal instruction whatsoever.
This matter will become increasingly important especially if, in the end, we enter the European Economic Community. One of the aims of the Community is to try to bring about some generally agreed principles for occupational training, presumably in aid of those clauses in the Treaty referring to the free movement of labour;but also, I think, because the Community realises that if the European economy is to continue there is a need for industrial training. The Commissioners have put forward proposals for general principles and a common policy for occupational training which I am sure is being studied


by the Ministry. It certainly should be. I believe it will be found necessary far us to improve our methods.
I have no doubt that the Financial Secretary will talk about the difficulties connected with this proposed new Clause. For example, for what period are the payments to be made; for how many years? I do not wish to commit myself in what is a highly controversial argument. But perhaps I may go so far as to say that I am prepared to see the relief given for three years without this in any way committing either side of industry to what should be the full period of apprentice training. In my opinion the period should be three years. This could be done in another way. But it should be a period of an approved form of training—approved by the Industrial Training Council, or same other body if the Minister can find some other better body to do it—or a period of training agreed between the trade unions and industry. It could be a period in which a man is coming up to his full rate of pay. I do not think we need argue about what it is called.
Any such period of training would have to start with a period in a works school or training workshop under properly qualified inspectors and continue with approved in-works periods up to a total of three years at the minimum. There might be other ways of doing it but there would not be much difficulty in defining that from the point of view of the Commissioners. There may be objections to the principle of allowing relief at more than 100 per cent. of expenditure, but that is not new. The investment allowance does this already and I was interested to see recently that the Canadian Government propose to allow one and one-third relief on sums spent on research by Canadian industry. I do not think that the Canadian Government have gone so far as to put that on the Statute Book, but I understand that it is a proposal. So the idea of allowing more than 100 per cent. relief as a subsidy or incentive to people to do things we want them to do is not new.
What would it cost? This is always a difficult question for the layman to work out. The amount cannot be very great. I suggest that about £2 million is probably near the mark. I should think that

it would be well worth that. Not only would there be an incentive to increase the number of apprentices, but, what is equally or perhaps more important, it would provide an incentive for better apprenticeship schemes in those firms, mainly the smaller firms, which so far do not have these schemes. It would not have much effect on the big firms which have good schemes, but it would greatly improve the quality because there would be less wastage because of people being half-trained.
This type of relief is likely to provide a reward for the economy as a whole which would be much greater than the cost to the taxpayer and it is a type of relief which I think the Government should consider seriously. The idea has been proposed two or three times before. My experience is that if one proposes something on two or three occasions, eventually one may win. I hope that on this occasion the Financial Secretary will be more forthcoming than on the last occasion.

Mr. Geoffrey Stevens: I do not know anyone who has been a more consistent advocate of more technical and scientific education, both inside this Chamber and outside, than the hon. Member for Edmonton (Mr. Albu). I doubt whether the hon. Gentleman is satisfied with the progress made in the last few years. There has been substantial progress, but I doubt whether he is satisfied, so I would remind him of the old adage that
Constant dripping hollows out a stone.
I am not suggesting that any of my right hon. and hon. Friends on the Front Bench bear the slightest resemblance to anything of that sort. But if the hon. Member is not satisfied I hope that he will not relax his efforts.
I cannot find it in my heart to disagree with anything he has said save for one thing. The hon. Gentleman did what I should have thought impossible. He tried to give some estimate of the cost which would be involved were this new Clause accepted. I have no more knowledge than he has on the subject, but had I been the hon. Gentleman I do not think I would have ventured a figure, because it is extremely difficult.

Mr. Albu: There is no magic in the figure I gave. I took the number of


apprentices which the Ministry of Labour reports to exist and what I thought might, roughly, be their wages, and I averaged it out over three years and from there on the hon. Gentleman can work out the rest.

Mr. Stevens: I accept that. But surely the whole object of the new Clause is to increase the number of apprentices and so automatically the cost would increase as well.
I suggest that the cost of implementing the provisions in this new Clause would be very much greater than the cost involved by the acceptance of the new Clause—Professional Payments to Educational Establishments—which we are discussing with the hon. Gentleman's new Clause. Whereas his Clause extends the payment of wages to apprentices, the new Clause to which I have referred would make a very modest extension of the existing Section 140 of the Income Tax Act, 1952.
As the hon. Gentleman has said, it deals with the allowances for tax purposes on payments made by a trader to a university, college or other establishments for technical training in the trade to which the trader belongs haying established proof for the purposes of Section 140 by the Minister of Education. This is not the first time that this subject has been debated. Indeed, an Amendment to the Finance Bill No. 2 which became the Finance Act of 1946, was moved by Lord Gridley, then Sir Arnold Gridley, the Member for Stockport, to add the words, "or profession" after the word "trade" wherever the word "trade" appeared. Lord Gridley made a short speech and was followed by my hon. Friend the Member for Ayr (Sir T. Moore) who made a much longer speech. The late Lord Dalton, the then Chancellor, wound up. He said he was not prepared to advise the Committee to accept the addition of the words "or profession", but he did not reject the principle. He said that this concession was a new idea and he thought it would be wise to go step by step and stage by stage and let the concession apply to payments by traders in the first instance and see how it worked out. He did not exclude the possibility of extending it to the professions at a later date. It is sixteen years since then—a very much later date. The point made by

Lord Gridley and my hon. Friend the Member for Ayr was to ask why this distinction was made between traders and professional people.
8.0 p.m.
Is it a good thing to increase the number of traders and a bad thing to increase the numbers in the professions? Do we not need more engineers and technicians? I should have thought so. There seems to be no logical reason for this distinction. There may well have been a practical one, and Lord Dalton suggested that we should take this matter stage by stage. I believe that the Section has worked very well, and I see no reason why we should not now consider extending it to the professions.
The hon. Member for Edmonton was venturesome in hazarding a figure for the cost of his new Clause. I shall not hazard a guess at the cost of mine in adding the words "or professions", except to say that I am sure that it would be trifling, because the educational establishments concerned must be approved for that purpose by the Minister of Education and, consequently, the number of such colleges and institutions would be limited. Since it seems such a dogicial thing to do and since it is sixteen years since the Committee agreed that it should go forward stage by stage, I hope that my hon. Friend the Financial Secretary will be able to say that he is agreeable to my proposal.

Mr. Harold Finch: The purpose of the Amendment is to give some added inducement to the small employer to do something more than he is doing now by way of providing apprenticeship schemes and training young people in skilled occupations. We need more technicians and craftsmen if we are to be successful in competition with other countries. We are short of them, and I am sure that the Committee will recognise that the position is becoming in some respects very serious. We are falling behind other nations in producing conditions which will enable the country through its technicians and craftsmen to meet present-day competition.
Many of the larger firms have been doing a great deal in training young people. They have the resources and


are able to do the job. They have their own training schemes and they train many young men and women for technical work, but the smaller employer is at a serious disadvantage. Many small employers normally find it difficult to carry unproductive labour costs, and the majority of firms employ fewer than 100 people. This is the trouble when we consider apprenticeship schemes in this country, and the purpose of the Amendment is to give these people additional help.
The Government issue White Papers and give instructions to the Ministry of Labour to encourage apprenticeship schemes, but here is a great opportunity to do something tangible to help the smaller employers to train young people. While the costs incurred by a company in training labour can be considered a long-term investment, many small firms have not the wherewithal for this purpose, and the cost involved is heaviest during the first twelve months when young people have to attend a technical college or an institute. The small employer is unable to meet these costs and he is discouraged by the seeming lack of enthusiasm for apprenticeship schemes.
We must realise that apprenticeship schemes depend upon the employer. It is he and not the education authorities who is responsible for the apprentices. It is wrong to put an apprentice on full-time production work, inasmuch as by so doing he is not receiving instruction in the wider aspects of the vocation for which he is trained. But the employer loses his services in these apprenticeship schemes.
In some areas, such as Treforest, there are group apprenticeship schemes under which an employer will release his apprentice to go to another employer for a time to gain additional knowledge and experience, but the first employer loses the advantage of the training in those circumstances. In South Wales, many large employers such as the Steel Company of Wales, Richard Thomas &Baldwins and the nationalised coal industry have their own training schemes, and they spend a great deal of money on the education of their apprentices in the Cardiff School of Technology. The small employer cannot do this, and yet the future of the appren-

tice depends to a large extent on what the small employer can do for him.
I notice that the Western Mail recently reported a meeting of the Welsh Board of Industry where it was stated that although 4,200 apprentices were taken on in Wales in 1961, an increase of nearly 25 per cent. over 1960, the absorption of young people into industry was still 10 per cent. below the national average. Here again this is largely due to the difficulties of the smaller employer. The Western Mail pointed out in a leading article that any incentive that in any way would help the small employer to adopt these apprenticeship schemes would be very valuable to the country and to the employer himself.
Day releases are of some assistance to young apprentices, but they are not entirely satisfactory. Some apprentices work an afternoon shift or a night shift and attend evening classes. My hon. Friend the Member for Edmonton said that young men get fed up with it. There is too much for them to do and they are discouraged. We also make use of block releases and sandwich courses, but these are costly.
The Amendment seeks to give these employers some help. I hope that the Government will assist in this matter. Whether they do it strictly on the lines of the Amendment is neither here nor there. They may well have something else in their minds. It is our purpose to improve apprenticeship schemes and to put the country in a better competitive position. We are falling behind, and the difficulty arises with the small employer. The costs are too much for him, but if he is given an incentive tonight through action on the part of the Chancellor he will be encouraged to give greater help to young apprentices who desire to take up these schemes but who are now barred in many cases because their employer is not in a financial position to help them.

Mr. B. T. Parkin: I would not presume to try to add to the forceful arguments advanced by my hon. Friend the Member for Edmonton (Mr. Albu), who has put so much time and skill into his work on this subject, here and outside, but before the Minister replies I should like to call his attention to one particular aspect of the problem, which I hope will interest him,


and which is extremely important. It is the London aspect.
There was a time when parents seeking to indenture their children as apprentices would, probably wisely, seek out a small employer. Even the one-man business could in those days have offered the best training a young boy could hope for. The difficulty in the London area now is to find small firms in small industries which will offer the same kind of opening. The Ministry of Labour does first-class work in London, and its officials give the best advice to parents seeking it, but it is natural that they should know most about the biggest firms that have the best schemes.
There is developing in London the strange phenomenon of small, skilled industries being squeezed out—a sort of Gresham's Law operation—because they do not offer opportunities to children leaving school to learn some of the very important crafts and skills that ought to be preserved. When the small, skilled industries are squeezed out they are replaced by industries offering less prospect to skill, and that we cannot afford in London.
In the big overcrowded cities there is already enough demand to put the severest strain on our capacity to find dwelling accommodation for those earning modest wages in semi-skilled and unskilled service occupations. We cannot afford a layer of surplus fat in the form of more semi-skilled and unskilled industries setting up in such factories as survive even with the strictest supervision of the planning authorities; the sort of industrial undertakings in the big cities of which no one ought to be proud, offering, as they do, a refuge to the type of people who ought, with all the advantages that the big cities can offer, to be doing better.
All the big cities, and particularly London, can offer technical training of every possible variety. Whatever one wants to learn one has, in London, only to make a telephone call to find some class to join, some way of getting the book learning about the skills of all these industries. Unfortunately, to get an apprenticeship where one can put that learning to practical application in day-to-day work is, indeed a rare thing.
I hope that the Minister will consider that aspect when he replies. I know

that his right hon. Friend the Minister of Labour will confirm what I say, and I hope that what I say will be accepted as an additional argument for seeking any device that can be found, including this one, to attract the smaller employer into going to the Ministry of Labour and making contacts with parents. There, again, it is so much more difficult for the small man in London to get suitable apprentices. London is not a village or small town where everyone knows of a small business that can give training in certain skills. It is a question of getting parents to meet employers and employers to meet potential apprentices. A small push in that direction might save these small but important industries that one would much rather have in London than the agglomeration of unskilled work in slum factories.

8.15 p.m.

Mr. Cledwyn Hughes: Notwithstanding the admirable speech of my hon. Friend the Member for Paddington, North (Mr. Parkin), I venture to say that this new Clause is of greater significance to Wales than to any other part of the United Kingdom, as I shall seek to show.
Over a wide area of mid-Wales we have the problem of depopulation, and in other parts of the Principality we have the problem of high and chronic unemployment. I refer to those two major problems only in passing—we have debated them many times in the House, and will return to them again in the Welsh Grand Committee tomorrow morning when we discuss rural Wales—but the reference is relevant, because where there is a shortage of work there are very few facilities for apprenticeships.
That is why such a large proportion of our boy and girl school leavers have to leave Wales and their own localities and go to the industrial conurbations of England to become apprenticed or get other training. That is a process that we want to stop; it has gone on for far too long.
In a Parliamentary Answer on 21st May, the Minister of Labour gave some very alarming details of the situation in Wales. Of the number leaving school between December, 1961, and—presumably—21st May, only 19 per cent. of


boys and 4 per cent, of girls obtained apprenticeships. As the national average is 35 per cent. for boys and 7 per cent. for girls, our average is just above half the national average. The Government should take some positive, constructive steps to ensure that in Wales generally and particularly in Mid-Wales and North Wales, a greater number of these boys and girls have the opportunity of apprenticing themselves.
The education authorities in Wales have done a good job; they have made adequate provision. As my hon. Friend the Member for Bedwellty (Mr. Finch) said, there is ample provision in South Wales. In North Wales, Flintshire and Denbighshire we have excellent technical colleges, but the industries there are small—outside Wrexham and industrial Flintshire—very successful but very small. Many of the industries I have in mind are peculiarly suitable for apprenticeship purposes. The Report of the Rural Industries Bureau for 1959 instances the kind of small industries that have in recent years been built up in the rural areas. It states:
It might surprise some that amongst the small producers with whom the Bureau has been in touch, and has helped, are manufacturers of dentists' chairs, glass fibre kitchen sinks, scientific instruments, television masts and aerials, surgical appliances for spastics, plastic flooring, lithographic printing machines, and many hundreds of other products equally as diverse and unrelated.
These new industries are being built up in the rural areas and are making an important contribution, but because of the lack of means, the industrialists concerned are not able to take apprentices as they would wish. Therefore, I welcome the proposed new Clause. I am not suggesting that it would solve the entire problem. It may need redrafting but, nevertheless, it would help to increase the number of apprentices in the area.
Educational opportunities are as good in Wales as anywhere else. The percentage of our grammar school leavers entering university is, with Scotland, the highest in the United Kingdom. There is a need for some positive Government action to assist us and the proposed new Clause may be the way in which we can be most effectively helped. I hope that the Financial Secretary will

accept it, or at least suggest an alternative which will be an inducement and an encouragement to employees.

Sir E. Boyle: This has been an interesting debate. It is always a pleasure to hear the hon. Member for Edmonton (Mr. Albu) speak on questions dealing with technical education and industrial training and there were moments in the discussion when I felt that I had strayed into a Ministry of Labour Supply day and I am sure that the Committee is extremely glad that we have had the company of the Parliamentary Secretary to the Ministry of Labour throughout the debate on this subject.
The intention of the new Clause in the name of the hon. Member for Edmonton —on which I shall spend the greater part of my remarks although I shall later come to the matters being discussed with it—is to give, through the taxation system, a Government subsidy in aid of the non-productive wages paid to apprentices who are released to undergo formal instruction, and also the costs of other training.
This is an important subject and it is the first time we have discussed it since the Finance Bill of 1959. It might be helpful and, I hope, in order, if I set the scene for my reply by first saying something about the existing tax treatment of expenditure associated with apprenticeship schemes. This treatment is really generous although I realise that there are a certain number of misconceptions prevalent about it. As our tax code now stands, both the Revenue expenditure and capital outlay which a trader may incur in connection with apprentice training schemes receive some recognition.
Revenue expenditure is deductible as a trading expense in the ordinary way and capital outlay on the provision of assets which the trader uses for training purposes can be the subject of a claim for the ordinary scheme of capital allowances appropriate to the asset in question. That means, first, that the wages paid to apprentices are deductible in full, notwithstanding that part of the wages may relate to periods when the apprentice has been released from productive work to attend classes at technical college or institution.
Secondly, the tuition fees which traders pay to an institution which these juveniles attend for further education are also deductible, just like any other revenue expenditure on welfare. I am told that if a trader himself organises courses of instruction on his own factory premises, the remuneration of the instructors can be deducted as well. Thirdly, the assets which the trader provides in connection with a scheme of his own for the training of apprentices and semi-skilled manual workers will generally rank as industrial assets. An extension to his factory to afford accommodation for training would rank as an industrial building and the movable equipment would rank as plant and machinery. Thus he can claim allowances in respect of all of this outlay.
In addition, there is special relief, to which reference has already been made, in respect of payments for technical education conferred by Section 140 of the 1952 Income Tax Act. That Section was intended to give a trader a tax deduction for a donation to an approved technical college to support the giving of technical education in some subject relating to his trade in any case where no such deduction would otherwise have been due.
All that added together seems to me quite reasonably generous tax treatment. I am tempted to anticipate a rather obvious question. I have not made a study of other countries in Western Europe but I can assure hon. Members that the points I have mentioned must rank as being reasonably generous tax treatment.

Mr. G. R. Mitchison: Supposing there is, as we were told there was in Wales, an apprenticeship scheme within an industry. Do the benefits which the Financial Secretary mentioned accrue to someone who is a partner or takes part in such a scheme—such as an employee—irrespective of whether the instruction is given in his own place of employment or somewhere else? Are the firms participating treated as a unit for tax purposes?

Sir E. Boyle: I think that that was implicit in what I was saying but I will gladly consider the matter further. I should have thought, however, that that

was implicit from the remarks I have made.
One idea that has got around is that the Inland Revenue imposes some restriction on the allowance for tax purposes of apprentices' wages. There is no truth in this. The wages of apprentices rank as a deduction for Income Tax and Profits Tax. Admittedly it is sometimes said that this allowance covers only about a half of the wages paid in respect of the hours during which an apprentice is released for formal instruction. The point is that the wages paid in respect of these hours are wages paid for hours which add nothing to current production and the expenditure to some extent must be paid out of the trader's own pocket, even after the tax allowances have been taken into account. That does not mean, as some have suggested—and this is not true—that only a half of that wage payment is accepted by the Revenue as business expenditure, for it is all accepted.
A second misconception is prevalent —that it is part of the function of Section 140 of the Act to give a deduction when the trader pays tuition fees for the instruction of his apprentices. That is indeed a misconception, because Section 140 does not come into the picture at that point. It is really a very limited purpose which I have described —simply that the fees would be deductible in the normal way as ordinary business expenses.
I want now seriously to consider the objectives which lie behind the proposed new Clause and I must make a few comments on the drafting, because, with great respect to hon. Gentlemen opposite, its drafting does not come up to the extremely high standard of the drafting that we have had on Amendments to the Bill. Subsection (1) of the draft new Clause states:
Section one hundred and forty of the…Act …shall apply to a payment of wages made to an apprentice …undergoing…a course of instruction …as it applies to such a payment as is mentioned in that section.
The whole point of Section 140 is that it deals with donations which would not be deductible under the general rule for computing trade profits whereas apprentices' wages are so deductible. Thus subsection (1) would not achieve anything at all and the same objection


affects subsection (2). I do not wish to be niggardly about its drafting, but the closing words of subsection (2) can only mean that the Clause, as it were, chases its own tail. The last three or four lines, taken on their face value, would seem to state that if the bonus of one-third is to be treated as it is within Section 140, the proposed new Clause would give a further bonus of one-ninth, one-twenty-seventh, and so on.
It is some years since I took the school certificate, but, if I remember rightly, the sum of the convergent series one-third, one-ninth, one-twenty-seventh, and so on, is one-half, and that, for the sum to infinity of a geometrical progression, the formula is R over 1 minus R. Perhaps that was not the intention of hon. Members in framing the subsection. There are some obscurities in subsection (3) with which I shall not trouble. It seems to me that the wage payments, which are ostensibly the chief concern of the new Clause, would fall completely outside it. The only effect of the Clause would be to increase by a bonus addition, which hon. Members in the law would enjoy calculating for themselves, the deduction already given under Section 140 for donations to approved technical colleges and other institutions. I do not think the Committee would be well advised to accept this suggestion.
The deduction allowed in Section 140 cases is in itself anomalous in that it is at variance with the general principles regarding the taxation of business profits. It is an exception to the general principle that, to be deductible in computing trading profits, expenditure should possess a direct connection with the process of earning those profits. I do not suggest for a moment that we should here and now do away with Section 140, but I do not believe it can be sensible to single out this fairly limited deduction in Section 140 for a bonus addition.
8.30 p.m.
I should now like to comment on what I believe is the real intention behind the Clause—[HON. MEMBERS: "Hear, hear."] —I apologise for being so long. I think that it was reasonable to point out what is already done in this tax field and then to point out that the new Clause as drafted did not carry out what I believe is the intention of hon. Members opposite.
I come to the question as to whether we should try to contrive through the tax system some kind of subsidy in connection with apprenticeship training. The whole question of apprenticeship training was fully discussed in the debate on 31st May last year. As has been said tonight, considerable progress has been made since that date, and mare boys and girls obtained apprenticeships and learnerships in 1961 than ever before. The numbers were 115,000 boys, which is 37·9 per cent. of all boys entering employment, and 20,500 girls, which is 7·2 per cent. of all girls entering employment. The figures for boys are a record both in numbers and as a percentage. The percentage for girls has been beaten before, but I am told that the overall figure for boys and girls is a record. The number of boys is 11 per cent. up on 1960 and the number of girls is 3 per cent. up. What is more, this increase is being maintained. In the first four months of 1960, the number of boys who obtained apprenticeships or learnerships was 39,000 as against 36,900 in the first six months of 1961, and the number of girls was 7,900 as against 7,300 in the first six months of 1961.
I am sure that no one in the Committee would wish to dispute that investment in skilled labour—investment in human beings, one might say—is even more important than adequate investment in machines, but, none the less, I do not believe it would be right to use the tax system as a means of giving a Government subsidy towards the cost of apprentice training. Apart from the principle involved, there would be serious difficulties in singling out expenditure on apprenticeship training as the subject of a special taxation bonus. A wage payment to an apprentice in respect of the hours during which he is released from productive work for instruction is, no doubt, extremely desirable from the economic and social points of view—I do not dispute that—but it is by no means the only form of payment which could be said to be desirable socially but which makes no direct contribution, or less than the normal contribution, to output.
I do not believe that, if we agreed to this proposal, it would stop there. I have no doubt that a similar claim would sooner or later be put forward in respect of a number of other things. Let


me mention two or three. For example, sick pay to employees absent through the consequences of illness or injury; compensation payments to wage earners displaced by a re-organisation scheme;or—surely hon. Members will agree that this is a fair example—the wages of disabled persons whose productivity is less than that of a person without a similar handicap. I am sure that all these are cases for which a strong social claim could he made.
Even to give effect to the present intention of hon. Members opposite would cost a good deal more. I must ask the Committee to excuse me from giving a precise figure, because this is a difficult matter. I thought, however, that the figure given by the hon. Member for Edmonton was a good deal too low.

Mr. Albu: The hon. Gentleman is talking about the number of reliefs which might be given for good social reasons, but the purpose of my Clause is to provide an incentive for apprenticeships. Is he suggesting that tax relief should never be used as an incentive? Surely, an investment allowance is not given on social grounds.

Sir E. Boyle: First, one has to consider investment in plant and machinery. Here, we are dealing with investment in human beings. It would not be possible to single out expenditure on apprenticeship training on economic and social grounds and not expect analogous claims to be made. I am sure that they would be made. I am not even sure that we could stop where I said that we could stop just now.
If we once started using taxation as a method of giving a hidden Government subsidy, there would be considerable pressure on the Government, first to grant tax reliefs for various forms of expenditure for which a good social case could be made but which did not rank for deduction under the ordinary rules, and, secondly, to give a fixed reduction for desirable expenditure which already ranked for tax relief.
The Government realise the need to stimulate the training of apprentices, and in spite of the encouraging figures I have quoted this is certainly not a subject about which any of us should be complacent. None of us, still less a Member like myself, who represents a

Midlands constituency, can be in any doubt about the increasing need for skilled workers. Quite apart from technical education, industrial training also is a subject of major importance, and it will clearly be one to which the National Economic Development Council will give attention. My right hon. and learned Friend the Chancellor of the Exchequer referred to this possibility in his Budget speech, when he said:
The Council will be considering matters under the direct control of Government …and matters which will more directly concern both sides of industry, for example, the recruitment and training of labour, restrictive practices, efficiency in management, the better use of skilled manpower."—[OFFICIAL REPORT, 9th April, 1962;Vol. 657, c. 969.]

Mr. C. Hughes: The hon. Gentleman has not directed his attention to the deplorable state of affairs in Wales. Where such a state of affairs exists, some special inducement should be given.

Sir E. Boyle: I cannot answer in detail about Wales, but I am bound to say that of all types of special inducement, discriminatory tax relief, so to speak—one that discriminates between one area and another—is about the worst. That adds to all the arguments I have used. It is one thing to have the Local Employment Act—quite another to use the taxation system for that sort of purpose.

Mr. C. Hughes: It would not be discriminating between one area and another but between one country and another.

Sir E. Boyle: These are points of terminology. If we deal with that, we shall make slow progress with the Bill. However desirable it may be to get more skilled workers, I cannot believe that the right way to solving the problem lies in giving special fiscal concessions which are hard to justify in principle and which, in practice, would be inequitable and difficult to work out. It would be invidious and against general confidence in the broad fairness of our taxation system to attempt to pick and choose between different types of socially desirable expenditures on human beings. Taking into account the unsatisfactory nature of the Clause of the hon. Member for Edmonton in itself, and also the difficulties both of principle and practice to which I have drawn attention, I must ask the Committee not to approve it.
I want to say now a word about the other Clause we are discussing. I can be a good deal briefer about this one. It seeks to give the taxpayer, relying on a provision assessable under Case II of Schedule D, the same relief in respect of gifts for technical education as is enjoyed by traders under provisions introduced in 1946 by the late Lord Dalton. Those provisions were deliberately included, as my hon. Friend the Member for Nottingham, South (Mr. W. Clark) admitted, in 1946. I have already stated that Section 140 is, in a sense, anomalous. It is at variance with the general principles governing the taxation of trading profits. This anomaly was created in 1946 in the national interest in order to encourage ever-increasing productivity.
I do not believe that we should be wise to enlarge Section 140 in the way which my hon. Friend suggested. I can say that the particular problem to which my hon. Friend drew attention could, in some circumstances, be met in another way, at any rate to some extent, if the institution receiving a payment could be set up as a charity. Individuals and members of partnerships making annual payments to it under its covenant would be able to get effective Income Tax relief for those payments. Looking back on the legislation as a whole, I do not think that it would be wise at this time to extend the ambit of Section 140 in the way my hon. Friend suggested.

Mr. Mitchison: The finale was magnificent. The idea of the Law Society as a charity is attractive but somewhat new. The speech as a whole was, if the Financial Secretary will allow me to say so with all respect to him, in the worst Treasury tone.
This Clause was discussed and criticised on almost exactly the same grounds in 1959. We did not alter it because, after all, what we really wanted to raise was a substantial question. We are bold enough to think that it does raise a substantial question.
There are two points. The first is about the present position. It is, of course, perfectly clear that wages paid to an apprentice are deductible as a trade expense. No one ignores that and no one doubts it. It is also perfectly clear that Section 140 of the 1952 Act

provides for something rather different, that is to say, payments made by an employer to an educational establishment in respect of one of his own apprentices.
What strikes us about this is that these two things are not quite as separate as the separation which no doubt exists for taxation purposes. I think that the vital case is the kind of case that my hon. Friend mentioned in Wales. The difficulty about apprentices at present in a great many parts of the country and in a great many industries is that if we were to confine apprenticeships to a single man taking a single apprenticeship we should get nothing done at all. There are not enough large firms which take apprentices and there is not sufficient collaboration, as we see it, between the firms in the industry.
There are innumerable industries, one in my own constituency—the boot and shoe industry—which are traditionally small firm industries. There are parts of the country where this kind of difficulty is cropping up over apprenticeships. I remember my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) complaining about apprenticeship schemes in Cardiff on the ground that the local arrangements were not sufficiently elastic to allow apprenticeships to be given full effect to, and consequently there were many school leavers who wanted to become apprentices who were unable to do so. I am not denying that improvements have been made, but I want more to be made.
I come to the taxation position. I cannot see the difficulty of extending the provisions of Section 140, which already apply to educational establishments, to somebody else's works which are in effect acting as an educational establishment in the trade for the apprentice of a small employer. Is there any reason why the small employer who is entitled to deduct the cost of sending his apprentice to a school or institute of some sort should not be allowed to do so if he sends him to a large firm and has him taught there? At present, such a large firm, although it is training a man, is not treated as an educational establishment.
8.45 p.m.
I was very interested in what the hon. Gentleman had to say about group schemes of this kind, but he did not


strike me as having had this kind of point very clearly in mind. I am not concerned with the drafting of the new Clause, although I do not think that it is quite as bad as the hon. Gentleman made out. It was put down deliberately in the same form because we wanted to raise the same series of points which have acquired added force in the interval.
The second point is the bonus element, the extra third. There are many instances, and the hon. Gentleman himself mentioned the obvious one. If there is an investment allowance for machinery, why cannot there be an investment allowance for apprentices? What is the difference when considering industry's future? If people are to be allowed an investment allowance and special tax treatment for the money they spend on scientific research in aid of their industry, why should they not be given similar treatment for what they do in the way of training, apprentices? I can see nothing do the least wrong or illogical in using the tax system for this purpose if there are, as there are, investment allowances and if one of the things specifically included is research and the like.
I think that we have heard a very narrow Treasury point of view and I thought that round the corner at intervals peeped the rather shy figure of a former Parliamentary Secretary to the Ministry of Education; but he found the atmosphere a little drafty and he hastily retired and went on with the Treasury brief. That is not the way that this sort of subject ought to be treated. If, for some reason or other, this is not the way to do it—and I appreciate that this is difficult ground and the sort of thing over which Government technical help is needed—the Government ought not to have waited for the Opposition to raise the matter three or four years after first raising it. They should have come forward with their own provisions to this end before now.
There is no doubt that there are anomalies, anomalies between one kind of instruction and another and anomalies between instruction in one place and instruction in another. There is no doubt that, although there has been improvement, there is every ground, even if only in fairness, for ask-

ing for a tax inducement. I say on the ground of fairness because I understand that many employers who take apprentices do not do so for the money they get out of it or necessarily because they are to get the future work of the apprentices, but because they think that it is right that it should be done. If there are such employers and we want to increase their number, surely something of this kind is called for.
I hope that the Government will approach this matter from a less narrow point of view. We are not too well off in this country for apprentices and technicians and others upon whose skill we must increasingly depend to keep our position and our standard of living in the world. We have tried and succeeded in the past in doing a great deal more than that and if we are to go on doing it—whether we are dealing with skilled work and the possibility of skilled work by hand, or by brain, or a mixture of the two—we have to do all we possibly can to forward it in this country of all others. I have always been proud of what has been done in this country in that way, whether with eminent scientists or skilled workmen and not least by the type of people who carry on the small businesses in some parts of London, one or two of which have already been mentioned.
There has been any amount of special skills in areas such as, for instance, Holborn, up by the railway stations, and other parts of London that I can think of—I am a Londoner. There is a tradition there of small businesses in particular skills. That has, of course, been translated into bigger factories and bigger units of industries. But we are slipping behind in comparison with other countries in this respect. We really must consider what inducements we can obtain, and, above all when dealing with apprenticeships, whether the right unit in which to organise the apprenticeship system is not something larger than the small factory which is the actual operative unit in some trades. It is not a matter that one wants to discuss at great length now, but the broad reasons for that seem to be absolutely convincing, and a reply based on the kind of criticisms that the hon. Gentleman rather shyly made is not of much use to the Committee. What we want to


know is why the Government object to this encouragement of apprenticeship and to the fostering of certain skills.
I should like to say a word about the proposed new Clause in the name of the hon. Member for Portsmouth, Langstone (Mr. Stevens). I appreciate the difficulties. One of them is perhaps that with regard to trade apprenticeship in the usual sense of the word it is often the case that the employer expects to get some future benefit from it. But those who go perhaps as articled clerks in some profession or another are usually taking what is really a course of instruction and going elsewhere when they have finished it. I see that there are distinctions between the two rôles of apprenticeship or articling, but I am bound to say that I think the Government are taking rather a narrow view of the whole question.
While I am primarily speaking to the Amendment put forward from this side of the Committee, if that were accepted I would hope that the rather larger question might be considered. The Section about which we are talking was brought in in 1946 under the Labour Government. Some water has flowed down the river since then, even under Tory Governments, and it is about time that the provision was enlarged.

Dr. J. Dickson Mabon: I hope that the Financial Secretary will respond to the question which has been put to him. With the natural patience of my countrymen, I have sat here listening contentedly to the speeches in the hope that the answer that we got would be as sensible as we expect from the hon. Gentleman, but I was disappointed.
There were at least two major contradictions in the hon. Gentleman's speech. In the first place, in the earlier part of his argument he said how generous the provisions were, and then he went on to condemn the idea of giving fiscal preference of this kind for this purpose as being very unsound in principle and very bad in practice. At this point I must say that I hope my hon. Friends will press the Amendment, even though it is defective in a number of drafting ways, to the point of a Division. It is quite reasonable that we should assert that the Government

are wrong in dismissing the principle just as they have done.
The other contradiction was when the hon. Gentleman talked about the number of apprenticeships being at a record level and being very satisfactory, and later went on to say that no one could be complacent about the situation. No one in the counry has gone on record as saying that the rate of progress of apprenticeships is satisfactory, and no one, certainly not in Scotland, has said that the rate of increase in apprentices taking day release classes is at all satisfactory. That is, surely, the purpose of the exercise.
If the Financial Secretary is telling us that the Government recognise that the rate is not at all the rate that we want but at the same time there are no fiscal means now whereby we can promote it, I should find that an astonishing argument. But even if the hon. Gentleman said that. surely he would be able to say that the Parliamentary Secretary to the Ministry of Labour was going to make a statement later on, let us say, about the introduction of compulsory day release to provide some mechanism whereby industrialists would take on more apprenticeships. The Government cannot skate out of this part of the Finance Bill with the assertion that there are no fiscal means and that the principle is bad.
If the Financial Secretary is speaking on behalf of the Government, he should give a coherent answer to our very good argument, which affects so many of our constituents—admittedly, some who do not vote for us at this juncture but on whom, nevertheless, the future of the nation depends. I thought that it was agreed by both sides that we wanted to invest more and more in our skilled personnel. Practically the only raw material that Britain has is its skilled personnel for training.
Surely, therefore, it would be reasonable for the hon. Gentleman to respond, to express his regret at having said that in principle the Government are opposed to this proposal and to say that although they may not accept the Clause, he accepts that there is, possibly, an argument for fiscal inducement to improve the rate of apprenticeships. Surely, the hon. Gentleman will go at least as far


as that. We do not ask him to say anything specific. We merely ask him to keep his mind open.
The Financial Secretary said that the National Economic Development Council was considering the matter and might make a recommendation. Are we to take it that if it recommends that there should be fiscal preference the Treasury with its cold, blank face will say that it cannot be done? Surely, it would not repudiate its brain child at this juncture.
The hon. Gentleman should not have been as firm and severe in what he said in his closing remarks about fiscal aids for apprenticeships. I plead with him, as we expect of a man of his intelligence and education, to put aside his dull, contradictory Treasury brief and to admit instead that there may he substance in the argument that by fiscal means we can aid industrialists, upon whom we depend, to step up the recruitment of apprentices and that we can aid them to encourage their apprentices to take more day-release classes and to take more advantage of technical education. If the hon. Gentleman goes as far as that, we will be content. If he does not, it is only right to challenge the Government on this issue.

Sir E. Boyle: We have been discussing the new Clause—very properly, for it concerns an important subject—for an hour and a half, but it is the usual experience of the Committee on the Finance Bill that approximately an hour and a half is a reasonable time to take on one new Clause. I will, however, respond to one point raised by the hon. and learned Member for Kettering (Mr. Mitchison) and answer the points raised by the hon. Member for Greenock (Dr. Dickson Mabon).
In answer to the hon. and learned Member for Kettering, I have ascertained the precise facts. Payments for the training of an employee's apprenticeship are allowable quite apart from Section 140 and an employer would be allowed the cost of paying for training in another's factory or in a group scheme quite apart from Section 140. This comes under the general principles which I enunciated at the start of my speech.

Mr. Mitchison: Is not the greater part of subsection (1) of the Clause already law and, therefore, it is practised?

Sir E. Boyle: Yes. I explained that it seemed to me that subsection (1) did not add to or subtract much from the situation and that the Clause made the mistake, as many people do, of assuming that Section 140 was relevant where it was not.
I am not unduly worried by the accusations of logical incoherence brought against me by the hon. Member for Greenock. There is nothing incoherent, for example, in saying that the trend of apprenticeships is a good one. The trend of the figures is good, but the result is not as good as we would like. I am happy to settle with the hon. Member for that formulation.
I purposely said something about our tax code as it now stood, and I mentioned what our tax system does in connection with apprenticeship training schemes. It is perfectly consistent to say what I did and at the same time to have doubts, which I expressed to the Committee, whether the tax system is well designed to perform the task which hon. Members had in mind when introducing the new Clause.
9.0 p.m.
In answer to the hon. Member's final point, I say that the Chancellor made quite clear in his Budget statement that the N.E.D.C. will be considering many matters affecting economic growth, and of course that includes recruitment and training for labour as well as a host of other important issues. What we have been discussing tonight has a bearing on all this, but I think it too early to say whether any particular fiscal measure would be the right way of tackling this intricate problem. I have given the Committee some reasons—which I stand by—for saying that I think there are some dangers in adopting this particular proposal, both on principle and in practice, but that does not mean that we have closed our minds for ever to all ideas of some fiscal measure for apprentice training if that can be justified on its merits, and we shall take full note of what the N.E.D.C. may recommend.

Mr. Mitchison: Since the responsibility rests with the Government and not with the N.E.D.C., since they have had three years to consider it and since they have altogether failed to meet the point to make an inducement for


apprentice training and the like in this country, I shall advise my hon. Friends to divide the Committee.

Division No. 207.]
AYES
[9.1 p.m.


Abse, Leo
Hart, Mrs. Judith
Peart, Frederick


Ainsley, William
Hayman, F. H.
Pentland, Norman


Albu, Austen
Henderson, Rt. Hn. Arthur (Rwly Regis)
Price, J. T. (Westhoughton)


Allaun, Frank (Salford, E.)
Holman, Percy
Probert, Arthur


Allen, Scholefield (Crewe)
Hooson, H. E.
Proctor, W. T.


Awbery, Stan
Houghton, Douglas
Randall, Harry


Bennett, J. (Glasgow, Bridgeton)
Howell, Denis (Small Heath)
Rankin John


Benson, Sir George
Hoy, James H.
Roberts, Albert (Normanton)


Blackburn, F.
Hughes, Cledwyn (Anglesey)
Roberts, Goronwy (Caernarvon)


Blyton, William
Hunter, A. E.
Robertson, John (Paisley)


Boardman, H.
Irvine, A. J. (Edge Hill)
Rodgers, W. T. (Stockton)


Bowden, Rt. Hn. H.W. (Leics. S.W.)
Irving, Sydney (Dartford)
Rogers, G. H. R. (Kensington, N.)


Boyden, James
Jeger, George
Ross, William


Brockway, A. Fenner
Jenkins, Roy (Stechford)
Short, Edward


Broughton, Dr. A. D. D.
Johnson, Carol (Lewisham, S.)
Silverman, Julius (Aston)


Brown, Rt. Hon. George (Belper)
Jones, Dan (Burnley)
Silverman, Sydney (Nelson)


Brown, Thomas (Ince)
Jones, J. Idwal (Wrexham)
Skeffington, Arthur


Butler, Herbert (Hackney, C.)
Jones, T. W. (Merioneth)
Slater, Mrs. Harriet (Stoke, N.)


Callaghan, James
Kelley, Richard
Slater, Joseph (Sedgefield)


Castle, Mrs. Barbara
Kenyon, Clifford
Smith, Ellis (Stoke, S.)


Chapman, Donald
Key, Rt. Hon. C. W.
Snow, Julian


Collick, Percy
Lawson, George
Soskice, Rt. Hon. Sir Frank


Craddock, George (Bradford, S.)
Ledger, Ron
Spriggs Leslie


Crossman, R. H. S.
Lee, Frederick (Newton)
Steel Thomas


Cullen, Mrs. Alice
Lever, L. M. (Ardwick)
Stewart, Michael (Fulham)


Darling, George
Lewis, Arthur (West Ham, N.)
Stonehouse, John


Davies, G. Elfed (Rhondda, E.)
Loughlin, Charles
Stones, William


Davies, Harold (Leek)
Mabon, Dr. J. Dickson
Stross, Dr.Barnett (Stoke-on-Trent, C.)


Davies, Ifor (Gower)
MacDermot, Niall
Swingler, Stephen


Davies, S. O. (Merthyr)
McInnes, James
Taverne, D.


Deer, George
McKay, John (Wallsend)
Taylor, Bernard (Mansfield)


Delargy, Hugh
McLeavy, Frank
Thornton, Ernest


Diamond, John
MacPherson, Malcolm (Stirling)
Timmons, John


Ede, Rt. Hon. C.
Mallalieu, J.P.W. (Huddersfield, E.)
Tomney, Frank


Edwards, Rt. Hon. Ness (Caerphilly)
Manuel, Archie
Wade, Donald


Edwards, Robert (Bilston)
Mayhew, Christopher
Wainwright, Edwin


Edwards, Walter (Stepney)
Millan, Bruce
Warbey, William


Evans, Albert
Mitchison, G. R.
Watkins, Tudor


Finch, Harold
Monslow, Walter
Weitzman, David


Fitch, Alan
Moody, A. S.
Wells, William (Walsall, N.)


Forman, J. C.
Morris, John
Willey, Frederick


Fraser, Thomas (Hamilton)
Moyde, Arthur
Williams, D. J. (Neath)


Galpern, Sir Myer
Mulley, Frederick
Williams, LI. (Abertillery)


Ginsburg, David
Oram, A. E.
Williams, W. T. (Warrington)


Gordon Walker, Rt. Hon. P. C.
Oswald, Thomas
Willis, E. G. (Edinburgh, E.)


Gourlay, Harry
Owen, Will
Wilson, Rt. Hon. Harold (Hyton)


Grey, Charles
Padley, W. E.
Woodburn, Rt. Hon. A.


Griffiths, David (Rother Valley)
Pannell, Charles (Leeds, W.)
Woof, Robert


Griffiths, Rt. Hon. James (Llanelly)
Pargiter, G. A.
Wyatt, Woodrow


Griffiths, W. (Exchange)
Parker, John



Hale, Leslie (Oldham, W.)
Parkin, B. T.



Hall, Rt. Hn. Glenvil (Colne Valley)
Paton, John
TELLERS FOR THE AYES:


Hamilton, William (West Fife)
Pavitt, Laurence
Mr. Charles A. Howell and


Harper, Joseph
Pearson, Arthur (Pontypridd)
Mr. Redhead.




NOES


Agnew, Sir Peter
Bishop, F. P.
Chataway, Christopher


Aitken, W. T.
Black, Sir Cyril
Chichester-Clark, R.


Allan, Robert (Paddington, S.)
Bourne-Arton, A.
Clark, Henry (Antrim, N.)


Allason, James
Box, Donald
Clark, William (Nottingham, S.)


Arbuthnot, John
Boyle, Sir Edward
Clarke, Brig. Terence (Portsmth, W.)


Ashton, Sir Hubert
Braine, Bernard
Cole, Norman


Barber, Anthony
Brewis, John
Cooke, Robert


Barlow, Sir John
Bromley-Davenport, Lt.-Col. Sir Walter
Cooper, A. E.


Barter, John
Brooke, Rt. Hon. Henry
Cordeaux, Lt.-Col. J. K.


Batsford, Brian
Brooman-White, R.
Corfield, F. V.


Beamish, Col. Sir Tufton
Brown, Alan (Tottenham)
Costain, A. P.


Bell, Ronald
Browne, Percy (Torrington)
Coulson, Michael


Berkeley, Humphry
Bullard, Denys
Craddock, Sir Beresford


Bidgood, John C.
Bullus, Wing Commander Eric
Crosthwaite-Eyre, Col. Sir Oliver


Bitten, John
Burden, F. A.
Crowder, F. P.


Biggs-Davison, John
Campbell, Gordon (Moray &amp; Nairn)
Curran, Charles


Bingham, R. M.
Carr, Compton (Barons Court)
Currie, G. B. H.


Birch, Rt. Hon. Nigel
Carr, Robert (Mitcham)
Dalkeith Earl of

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 157, Noes 224.

Dance, James
Lagden, Godfrey
Pym, Francis


d'Avigdor-Goldsmid, Sir Henry
Langford-Holt, Sir John
Quennell, Miss J. M.


Deedes, W. F.
Leather, E. H. C.
Rawlinson, Peter


de Ferranti, Basil
Leavey, J. A.
Redmayne, Rt. Hon. Martin


Digby, Simon Wingfield
Legge-Bourke, Sir Harry
Rees, Hugh


Donaldson, Cmdr. C. E. M.
Lewis, Kenneth (Rutland)
Renton, David


Doughty, Charles
Litchfield, Capt. John
Ridley, Hon. Nicholas


Drayson, G. B.
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Roberts, Sir Peter (Heeley)


du Cann, Edward
Lloyd, Rt. Hon. Selwyn (Wirral)
Robinson, Rt. Hn. Sir R. (B'pool, S.)


Elliot, Capt. Walter (Carshalton)
Longden, Gilbert
Rodgers, John (Sevenoaks)


Elliott, R. W. (Nwcastle-upon-Tyne, N.)
Loveys, Walter H.
Roots, William


Emery, Peter
Lucas, Sir Jocelyn
Russell, Ronald


Errington, Sir Eric
Lucas-Tooth, Sir Hugh
Scott-Hopkins, James


Farey-Jones, F. W.
McAdden, Stephen
Seymour, Leslie


Farr, John
MacArthur, Ian
Shaw, M.


Finlay, Graeme
McLaughlin, Mrs. Patricia
Shepherd, William


Fisher, Nigel
Maclay, Rt. Hon. John
Skeet, T. H. H.


Fraser, Ian (Plymouth, Sutton)
MacLeod, John (Ross &amp; Cromarty)
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Freeth, Denzil
Macmillan, Maurice (Halifax)
Smithers, Peter


Gammans, Lady
Macpherson, Niall (Dumfries)
Smyth, Brig. Sir John (Norwood)


Gardner, Edward
Maitland, Sir John
Spearman, Sir Alexander


Gilmour, Sir John
Markham, Major Sir Frank
Stevens, Geoffrey


Goodhart, Philip
Marshall, Douglas
Steward, Harold (Stockport, S.)


Goodhew, Victor
Marten, Neil
Stodart, J. A.


Gower, Raymond
Mathew, Robert (Honiton)
Stoddart-Scott, Col. Sir Malcolm


Grant, Rt Hon. William
Matthews, Cordon (Meriden)
Storey, Sir Samuel


Grant-Ferris, Wg. Cdr. R.
Maxwell-Hyslop, R. J.
Studholme, Sir Henry


Green, Alan
Maydon, Lt.-Cmdr. S. L. C.
Tapsell, Peter


Hall, John (Wycombe)
Mills, Stratton
Taylor, Sir Charles (Eastbourne)


Hamilton, Michael (Wellingborough)
Miscampbell, Norman
Taylor Frank (M'ch'st'r Moss Side)


Harris, Frederic (Croydon, N.W.)
Montgomery, Fergus
Teeling, Sir William


Harris, Reader (Heston)
More, Jasper (Ludlow)
Temple, John M.


Harrison, Brian (Maldon)
Morgan, William
Thatcher, Mrs. Margaret


Harrison, Col. Sir Harwood (Eye)
Morrison, John
Thomas, Leslie (Canterbury)


Harvie Anderson, Miss
Mott-Radclyffe, Sir Charles
Thomas, Peter (Conway)


Hastings, Stephen
Nabarro, Gerald
Thompson, Kenneth (Walton)


Hay, John
Neave, Airey
Thornton-Kemsley, Sir Colin


Heald, Rt. Hon. Sir Lionel
Nicholson, Sir Godfrey
Tiley, Arthur (Bradford, W.)


Hiley, Joseph
Oakshott, Sir Hendrie
Touche, Rt. Hon. Sir Gordon


Hill, J. E. B. (S. Norfolk)
Osborn, John (Hallam)
Turner, Colin


Hirst, Geoffrey
Osborne, Sir Cyril (Louth)
Turton, Rt. Hon. R. H.


Holland, Philip
Page, Graham (Crosby)
van Straubenzee, W. R.


Hollingworth, John
Page, John (Harrow West)
Vane, W. M. F.


Hopkins, Alan
Pannell, Norman (Kirkdale)
Wakefield, Sir Wavell


Hornby, R. P.
Partridge, E.
Walker, Peter


Hornsby-Smith, Rt. Hon. Dame P.
Pearson, Frank (Clitheroe)
Wells, John (Maidstone)


Howard, John (Southampton, Test)
Peel, John
Williams, Dudley (Exeter)


Hughes Hallett, Vice-Admiral John
Percival, Ian
Williams, Paul (Sunderland, S.)


Hughes-Young, Michael
Pickthorn, Sir Kenneth
Wills, Sir Gerald (Bridgwater)


Hurd, Sir Anthony
Pilkington, Sir Richard
Wilson, Geoffrey (Truro)


Hutchison, Michael Clark
Pitman, Sir James
Wise, A. R.


Jenkins, Robert (Dulwich)
Pitt, Miss Edith
Wolrige-Gordon, Patrick


Johnson, Dr. Donald (Carlisle)
Pott, Percival
Worsley, Marcus


Johnson, Eric (Blackley)
Powell, Rt. Hon. J. Enoch
Yates, William (The Wrekin)


Jones, Rt. Hn. Aubrey (Hall Green)
Price, David (Eastleigh)



Kerans, Cdr. J. S.
Prior, J. M. L.



Kerby, Capt. Henry
Prior-Palmer, Brig. Sir Otho
TELLERS FOR THE NOES:


Kimball, Marcus
Proudfoot, Wilfred
Mr. Whitelaw and Mr. McLaren.

New Clause.—(EXTENSION OF RELIEF UNDER S. 9 OF FINANCE ACT, 1956.)

(1) Subsections (1) and (2) of section nine of the Finance Act, 1956 (which provide relief from income tax on certain savings bank interest), shall, subject to the provisions of the next following subsection, apply in respect of dividends on shares of a society registered under the Industrial and Provident Societies Acts, 1893 to 1961, or under the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1955, and in respect of interest on deposits with such a society or with a registered friendly society, as they apply in respect of interest on deposits with the Post Office savings bank.

(2) Where by virtue of the last foregoing subsection the amount of surtax payable by an individual would exceed the sum of—

(a) the amount of surtax which would have been payable by him, if that subsection had not been passed, and

(b) the amount of relief, if any, to which he is entitled by virtue of that subsection, that excess shall be disregarded for all the purposes of the Income Tax Acts.—[Mr. Sydney Irving.]

Brought up, and read the First time.

Mr. Sydney Irving: I beg to move, That the Clause be read a Second time.

The Chairman: With this new Clause it would be convenient to discuss the new Clauses—Savings (pay as you earn) —Relief from tax on certain dividends —Relief on savings policies.

Mr. Irving: In the Finance Act, 1956, the Government provided for the exemption from Income Tax of the


first £15 of interest on savings in the Post Office and in the ordinary departments of trustee savings banks. The conditions for this exemption were twofold—first, that these savings were at a fixed rate of interest, and secondly, that they were moneys loaned directly to the Government. Each year since 1956 successive Treasury spokesmen have stuck inflexibly to these conditions and refused to consider any variation to cover other institutions concerned with small savings.
The Clause seeks to extend this exemption to apply in respect of dividends on shares in societies registered under the Industrial and Provident Societies Acts. The co-operative movement, which has been the main sufferer under this discrimination, occupies a very special, and indeed in some respects, unique position in our national life. For over 100 years it has been one of the main instruments in the encouragement of thrift among the working classes. Through its dividends on purchases it has made it possible for millions of people to accumulate small savings in a way which would otherwise have been quite impossible. Its total capital amounts to over £300 million, of which £254 million is share capital, the result of the small savings of its 13 million members. This represents roughly £20 per head. Since the war it has distributed in dividends over £1,000 million. In the last financial year dividends amounted to over £60 million. These are very considerable sums and in social and economic terms they have made a very valuable contribution both to the small savings of the nation and to the well-being of millions of ordinary people.
Our submission is that, in defining the conditions of the original concession, the Chancellor did not take sufficiently into account either the character of the co-operative movement and its work or the possible damage it could suffer because of a discrimination in the refusal of this concession to its members. The first condition which was laid down was that this exemption should apply only to savings where the rate of interest was low. But the co-operative movement limits its interest on its share capital to between 2½and 3½per cent. Its share capital is limited to small savings, as

there is a statutory limit on the holding of any one member.
The Clause does not seek to extend this exemption to loan capital, precisely because there is no limit by Statute on loan capital and this, therefore, does not come into the same category. So far I have been talking about the retail consumer movement. This concession would be equally significant, if not more so, to members of the agricultural co-operative movement, which has had favourable treatment at the hands of the Government. The agricultural co-operatives, being fewer in number, therefore have a bigger personal contribution to make, and this discrimination may discourage them from making that contribution.
9.15 p.m.
Members of the co-operative movement feel a stinging and continuing sense of injustice at their treatment by the Government. The Royal Commission on the Taxation of Profits and Income warned against unfairness in the distribution of this relief, and also against what it galled "delusive savings". The Chancellor was and is anxious to encourage small savings, and this discrimination against co-operative investments places a handicap on the movement. What is worse, it will mean the transfer of past savings, which was certainly not the object which the Chancellor had in view at the time.
The cost of the concession would be no more than £2 million, and it could well lead to an overall increase in small savings. Government spokesmen profess to be well disposed towards the co-operative movement, but how can they maintain this claim so long as these glaring examples of discrimination against the co-operative movement continue year in and year out? I ask the Chancellor to take a more flexible view of the matter and to end this deep sense of injustice by accepting the Clause.

Mr. Geoffrey Lloyd: I wish to speak on the proposed new Clause—Relief on savings policies —in the names of many of my hon. Friends and myself. For quite a long time many of us have been seeking a method of fiscal savings, especially savings in equity shares. Some very interesting schemes have been produced,


but they have never got anywhere. The reasons have been either that they have been too complicated in the mechanism which they sought to establish, which has caused people to be frightened off, or that there has been a difficulty in establishing a precise basis to which to attach the Income Tax concessions.
For these reasons my right hon. and hon. Friends and I have approached the problem in a completely different way. We seek to provide a method of great simplicity, which we hope is also circumspect, practical and moderate. We propose that the existing Income Tax concession—two-fifths of the standard rate, with no application to Surtax—which at present attaches to life assurance policies, should be extended to savings policies which do not involve death benefits. In other words, the single legislative act involved would be the removal of life cover or death benefit as the essential condition of the granting of Income Tax relief to an insurance policy. This would mean that encourage-meat would attach to a pure endowment policy without life cover. We believe that this would be important, because, especially in the later years of life, the cost of life cover is considerable.
The Committee will appreciate that we have avoided setting up any new and complicated machinery. Instead, we have taken advantage of an existing piece of fiscal machinery which has already attached to it the precise base to which the concession is attached, which is working smoothly, and is well policed, from a revenue point of view, by long practice and custom.
This rather simple and practical plan has another advantage. Because we are adapting an existing form of relief, it involves automatically twelve annual contractual payments, because one of the existing conditions of the relief in life assurance is that the premiums must not be more than 7 per cent. of the capital sum. This amounts to about twelve years of contractual payments. While this is necessitated by the technical form of the scheme, we feel that it has great practical advantages. The intention to save is one thing but a contractual method of saving involves a degree of personal self-discipline which over many years has been found to be a useful method of stimulating savings.
There is one other extremely important point. We are trying to encourage the small man to become an investor. I think everyone will agree, from long experience in our constituencies, that the practice of regular saving for particular objects is a widespread working-class tradition in this country and has been for many years. What we are doing, therefore, is to take a long established working-class practice, formalise it and attach to it a fiscal advantage.
We feel that this is a method of considerable importance. I wish to emphasise that this Clause aims at the small man, and that is why we have limited the premiums which can attract tax advantage to a maximum of £150 a year. There is nothing in this for the rich capitalist or the man with the high salary. As a matter of fact, most of the premiums would be much less than £150 in our estimation, but £150 would be the absolute limit. This scheme is beamed towards the £15 to £40 a week man.
I should like to remind the Committee of a little bit of history in this respect. It was in 1853 that Mr. Gladstone reintroduced life insurance relief which was originally in Pitt's Income Tax. He did so to encourage the new lower middle classes to make provision for their dependants. We are trying to attract the new emerging middle classes which we see in the country today. Everyone would agree that they have far more income money than was the case years ago, but they still find it difficult to get any capital. We ask the Committee to give favourable consideration to this scheme which would enable the emergent middle classes to get a bit of capital. We hope that the Government will give favourable consideration to it and perhaps improve it.

Mr. Ellis Smith: The right hon. Member for Sutton Coldfield (Mr. G. Lloyd) has made a reasoned case for the Motion he proposed. Would it be fair to interpret the right hon. Gentleman as supporting the case presented by my hon. Friend the Member for Dartford (Mr Sydney Irving)?

Mr. Lloyd: The proposals are different. Those to which I have referred are designed to encourage equity investment.

Mr. Mitchison: Are the savings policies in any way different from the endowment policies?

Mr. Lloyd: They differ essentially in the fact that death benefit would not be compulsory.

Mr. Donald Wade: I am very interested in the observations of the right hon. Member for Sutton Coldfield (Mr. G. Lloyd) and I think they deserve serious and favourable consideration. I look forward to hearing the comments of the Chancellor. You have indicated, Sir William, that in discussing this group of new Clauses consideration may be given to No. 57—Relief from Tax on Certain Dividends. The object of that Clause—it is simpler than the one referred to by the right hon. Member for Sutton Coldfield—is to provide relief from tax on the first £25 of investment income.
There is another proposal on the Order Paper which would increase the limit from £15 to £25 for savings bank interest, and taken together the result would be relief up to £25 on all investment income. That is one of a number of proposals which my colleagues and I have in mind for encouraging small savers. There is, of course, the underlying assumption that it is desirable to encourage savings, and I think that in this Committee that is accepted. It is not accepted quite so widely in all sections of the community.
I remember an interesting observation from an elderly lady in the West Riding of Yorkshire. She said, "My husband and I are getting along very nicely, thank you. We have managed not to save." Further inquiries elicited the fact that her parents had invested all their savings in cottage property which had caused a great deal of trouble and had landed them in considerable loss of capital. She therefore took a very poor view of saving. Hon. Members will also know of people who have put money in 3½per cent. War Loan with rather sad consequences. There is risk in all investments, as anyone who looks at the stock market today realises, but this is not an argument against saving and, from the point of view of the national interest, the question is how to achieve a high rate of investment without inflation. One of the answers is undoubtedly by more individual savings.
The question arises, therefore, how this is to be done. Taking the long view, the greatest benefit both to the individual and the community as a whole is obtained by ensuring that saving should be as widely spread as possible and should include equities. I do not think that there is any case today for limiting tax relief to one particular form of saving, for example, the Post Office Savings Bank. We have reached a stage of development when we can go beyond that. I would encourage savings in equities as well as in Government securities and the Post Office Savings Bank.
I should also like to see greater uniformity. An article in the Westminster Bank Review, written by Basil Taylor states:
Equality before the tax law surely requires that all citizens should be allowed to save for retirement and other purposes the same maximum proportion of their true remuneration free of tax—no matter what their employer may have chosen to provide them with by way of pension. Many readers will no doubt be surprised at the value of the tax relief for capital accumulation already permitted under the existing law in the form of ad hoc concessions.
That raises the different point that there are great divergencies in tax relief between one person and another.
The article continues:
…in varying degrees all employees whatever their salaries appear to be discriminated against vis-à-vis their self-employed brethren who are business proprietors.
I believe that this is true, but the Amendment with which I am dealing is concerned with a rather more limited point, namely, the unevenness of the spread of tax relief.
I should have thought that the time had come when if it is right for the Post Office Savings Bank it is equally appropriate for other forms of saving. My only purpose in referring to this specific amendment is to urge that there should be more equality of treatment and that it should apply to all investment income up to £25 per annum. The time has come for that. There is need for a rationalisation of tax relief for personal savings and I hope that this will be regarded as one way of achieving it.

9.30 p.m.

Sir Lionel Heald: It is a great privilege to be able to take part in this debate, and I very warmly welcome


the proposal of my right hon. Friend the Member for Sutton Coldfield (Mr. G. Lloyd). I say at once that I can claim no expert knowledge of this subject at all, but I have in the past had an opportunity of learning something about it—one might say from the other side of the Table—when I had the honour of assisting my right hon. Friend the Home Secretary, when Chancellor of the Exchequer, in resisting certain proposals that were made during those years.
I learnt something of the possible classic objections to proposals of this kind, and perhaps the Committee will allow me to seek to show that those objections do not have any serious application to my right hon. Friend's proposal. The first of them has always been that it is a revolutionary departure from principle that there should be any relief of this kind. On the contrary, I would say that this proposal is a logical, sensible and long-needed extension of the principle that has been recognised since 1799. Going back over 160 years, that principle has been accepted, and acted upon progressively—with certain backsliding from time to time—by Governments of very varying kinds and colours.
In the very first Income Tax introduced by Pitt, there was a provision for relief in respect of insurance policies. There was a reaction in the Granville Coalition Government of 1806, when those reliefs were very severely curtailed. All parties deserve praise, and some blame, in this matter because, as my right hon. Friend mentioned, the next stage was Mr. Gladstone's first Budget in 1853, when he redressed the balance and allowed up to one-sixth of income for purposes of insurance.
The principle was carried gradually further until 1916, the time of Mr. McKenna. There was then an unfortunate reversal, because endowment policies had by then become common and the view was taken that a wrong line was being followed. So, in 1916, there was a successful effort to reverse the process, and it was laid down quite definitely that no policies could be eligible for relief unless they contained full life cover.
But in 1956, when my right hon. Friend the Prime Minister was Chan-

cellor of the Exchequer, progress began again, and we found then, as we find today, that there provision could be made without the requirement of life cover in respect of retirement pensions and provision for dependants. That was a tremendous step forward, because it finally killed the idea that there was a necessity for life cover.
It had another effect. In the books I had to read at one time on taxation, written by great pundits of the past, there was the idea of some lack of equity in giving relief in respect of insurance policies, and so on, because there were other forms of savings, and one had not the principle of absolute equality. That, again, has now gone, of course, so we have a very different position today, and I cannot help thinking that it is in keeping with the modern outlook that that should be so. We must go further because we find that the limitations are tied up with death and old age. That is the position. There must either be provision for life insurance or there must be some requirement for old age in respect of retirement or dependants.
I suggest that today, irrespective of party politics, we should look at the matter from a different point of view. It is not only a question of the dead and the dying. We are concerned today with the living and with the younger generation which wants to be able to save for their lifetime, and that is what the proposal before the Committee would enable us to do.
I do not wish to delay the Committee because I realise that a number of hon. Members wish to speak. It is pleasant to find that we have no ground for difference between us from a party point of view. Our proposal may be different, and while my hon. Friends and I say that ours is better than theirs, I will not quarrel about this because other hon. Members will no doubt say the same about their proposals. I must, however, mention one or two classic objections which are always raised. It is said that the Government should not be tied to any alteration in the taxation structure. But that must not be pressed to doctrinaire limits because, in this case, I do not believe that that argument can apply. Another argument which one frequently finds in the textbooks and which is often used by Ministers is that


of the complications of the provisions for relief, the difficulty of understanding those provisions and the administrative problems involved. Those matters are always legitimate objections, but I hope that they will not arise on this occasion.
I am sure that my hon. Friends will agree that those sort of arguments cannot apply in this case for there could not be anything more simple than what we have proposed. We frequently hear about so-called evasion. I understand that to be a technical term used by the Inland Revenue, a term one might translate into the phrase "advantage may be taken of these proposals by people who are not concerned with saving in the strict sense of the word." No doubt some of my hon. Friends with experience of this matter will deal with this, but I believe that that objection is largely theoretical. I am told by those who should know that the idea that the millionaires will rush forward as soon as this proposal becomes law—as I hope it will—and take advantage of it has no foundation. I am sure that 12 payments amounting to £150 a year for a relief of £23 will not set all the millionaires' houses on fire.
I hope, therefore, that those objections will not be advanced on this occasion and that we shall receive a sympathetic reply from the Government, because after all we are concerned more than ever today with savings. There may be complicated and difficult arguments about what are savings or real savings, but it is an obvious fact that a large number of people today do not find sufficient outlet on terms they can afford for their desire to save. If we accept the principle that saving is desirable, it is the duty of the Government to set an example, and I believe that this proposal provides the means by which they can do that.

Mr. Mitchison: I have a great respect for the right hon. and learned Gentleman in many ways, particularly for his legal knowledge. Are these savings policies of insurance, and, if so, against what do they insure?

Sir L. Heald: I do not propose to enter into a legal discussion with the hon. and learned Gentleman. If he would like to take my opinion and to pay for it, I should be glad to give it.
As I was saying before the hon. and learned Member helpfully intervened, surely if savings are of great national importance, the Government should show that they are anxious to support them. Some action is necessary in this matter. Since the opinion of those who know about these things, not of those who merely talk about them, is that additional outlets are required, let us see what we can do to help. If the savers are encouraged, they are good citizens, and if they are good citizens that is to the advantage of the country.

Mrs. Harriet Slater: The right hon. and learned Member for Chertsey (Sir L. Heald) said that savers, particularly small savers, should be encouraged, that the Government needed these small savers and therefore that something should be done to encourage them. We agree. We have been advocating that for many years, but we have not achieved very much.
The right hon. and learned Gentleman said that his proposal was advocating help not for people who saved in order to leave their savings to somebody else, but for those who wished to use their savings in their own lifetime. The cooperative movement has been encouraging small savers so that they could benefit from their savings in their own lifetime. It has been doing that in a very simple but effective way, and many thousands of people have benefited from it in their lifetime. Ordinary folk have been able to buy necessities and to go for holidays which they otherwise would not have been able to do. All sorts of simple advantages have accrued to them through saving with the co-operative movement.
One of the fundamental principles of the movement is that it encourages thrift. It was started in order to help people to help themselves. By its principle of thrift, it has encouraged people to leave in their dividend, to add to their small penny bank savings accounts, thus building up their share capital, and to transfer their penny bank savings to their share capital.
Both new Clauses seek to achieve a sense of justice in taxation: The one dealing with the co-operative movement seeks to secure treatment equal to that given to Post Office savings and to savings in trustee savings banks. At


the moment, the first £15 of interest on money deposited in trustee savings banks and the Post Office is exempt from tax. The co-operative movement has no such exemption. The proposal seeks to achieve equal treatment between all three forms of saving.
9.45 p.m.
In 1960, about £59·5 million was returned by co-operative societies in dividends. Much of that money was left in as share capital. Not everyone draws out his dividend. More and more people tend to leave it in. My hon. Friend said that over the last fifteen years £1,000 million had been returned as dividend in co-operative societies. In addition to the normal dividends paid in co-operative societies, many of them have what we used to call the "penny bank" but which is now the small savings deposit account. In 1960, £7·6 million was deposited in that way. The Government ask that such savings shall be encouraged because the country needs this kind of small saving. Last year over 32 per cent. of this kind of co-operative saving was reinvested in Government securities. That is another argument for justice to be done to the co-operative movement in thus respect. The movement not only encourages small savings by ordinary working people. It also does a very good job of work in reinvesting some of the small savings in Government securities.
Another discouragement to co-operative savers is the Government discrimination against the co-operative movement, inasmuch that when these people become old or ill and have to apply for supplementary benefits, their co-operative savings are exempted only up to £125 before the rest is taken into account. Yet if a person has put his money in the Post Office or in the trustee savings bank, the first £375 is exempted.
I said this last year, and I say it again: the response of the Government to this Clause moved by my hon. Friend is another indication of deliberate discrimination against the co-operative movement. If the Government are really serious in carrying out support for small savers, I see no reason why they should not accept this Clause. They would at least give a sense of justice to small savers and to the co-operative movement.

Mr. W. Clark: The principle of the new Clause—Saving (pay as you earn)—was fully debated last year and I shall not detain the Committee by canvassing the arguments afresh. But ease of savings is something to which we should pay attention. Since there are 24 million people under P.A.Y.E., I cannot see why the Treasury cannot utilise the P.A.Y.E. machinery as a method of saving. There are industrial savings groups covering 3¼million people, saving about £100 million a year. But of that figure only £20 million can be considered as long-term saving, As the hon. Lady has said, some £80 million is put by for such things as holidays or new clothes and thus may be called short-term savings.
That is why I am delighted to support my right hon. Friend the Member for Sutton Coldfield (Mr. G. Lloyd) in his ingenious suggestions for savings. They would give a great boost to long-term saving. Each of us wants to do something for the small saver. The only way in which we can assist him is to make saving a little easier and give him some fiscal incentive. I know that the Treasury will put up many administrative difficulties in explaining why this, that and the next should not be done. But we have reached the stage when we must tell the Treasury that it must overcome these difficulties because of the paramount importance of the need to assist small savers. Each of us in the Committee is prepared to say that we will help the small saver. On the objective we are agreed. What we have to consider is the method of achieving this objective.
I should like the Chief Secretary to the Treasury to give a firm undertaking that between now and the next Finance Bill he will introduce concrete methods of encouraging small savers by giving fiscal incentives. That is something that we can quite easily ask for in view of the fact that we so often say, "It is essential to save. We must help the saver, but the administrative difficulties are so great." I do not believe that we should over-emphasise this argument of the administrative difficulties.
We say that we are a property-owning democracy. I am firmly convinced of this and unashamedly a supporter of giving small savers a tax incentive. It does not really matter which method is


used to give the small saver some incentive. What is important is that something should be done for the small saver, and I suggest that the Government, with their expert advice from the Treasury and Inland Revenue, could easily come forward with a scheme which would help the small saver who is obviously doing a first-class job of work for this country.
Surely that is the object of all of us in the Committee, and we must make it easy for people, as my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) said, to acquire capital while they are alive. Let us have this capital saved during our lifetime and enjoy it during our lifetime. Do not let us always be waiting for death before anyone can benefit.

Mr. Callaghan: Would the saving policies have a surrender value? Would they be with-profits policies or without-profits policies? What would happen if a man decided that he would pay no more? Would his premiums, or his savings, be repaid, or how would they be accounted for?

Mr. Edward du Cann: The hon. and learned Member for Kettering (Mr. Mitchison) asked a particular question, and other questions have been asked by the hon. Member for Cardiff, South-East (Mr. Callaghan). To some extent the details of this matter are unimportant. One imagines that a number of institutions, which I shall proceed to name, would formulate plans and submit them to the Inland Revenue which would then approve them as being responsible and sensible suggestions and thereafter they would be offered for sale to the public.

Mr. Callaghan: Are they not important to this extent, that if the hon. Member and his friends wish to bring them under life insurance relief there is a case for demonstrating that they are equivalent to other forms of life insurance relief? I am not saying that there is not a case for them but asking what is the case for treating them as life insurance.

Mr. du Cann: That is absolutely true, and I agree with it. I was going on to elaborate. We are talking about total premiums of £150 in one year and we

are talking about perhaps a twelve-year period. What I am endeavouring to say is that these details could remain to be settled and be a matter of judgment and that it is not necessary for the Committee to decide them tonight. What seems important to many of us is that we should get clear agreement, as now seems to exist between the two sides of the Committee, that we have waited for help for small savers for far too long and that it is time that we had practical action. It also seems to us that the suggestions which we are making are a sensible method of achieving the sort of results which we all believe to be desirable.
As to the users of this scheme; I believe that the building societies, the joint stock banks, the co-operative institutions, the National Savings movement, the hire-purchase companies, or at least those accustomed to soliciting deposits from members of the public, and the trustee savings banks would be very well placed to formulate schemes for attracting savings. Any of these policies or contractual schemes would have a proper surrender value. That would be an important part of them. The hon. Member for Cardiff, South-East specifically asked about the with-profits element, and one assumes that there would be some method of reinvesting income so as to ensure that there was a continuous growth of capital and a compounding feature.
But it should be appreciated that members of the public could be offered two types of schemes. They could be offered fixed interest schemes, so to speak, in the categories which I have mentioned, or schemes of equity investment through, for example, unit trusts with which, as you, Sir William, and the Committee know, I am associated and in which I must again declare my interest. In the case of unit trust schemes, contractual schemes have been begun on this type of model in the United States, though without any form of tax relief, at the rate of about 40,000 a month. We in the United Kingdom are opening new schemes probably at the rate of about 50,000 a year. We are just beginning and no doubt the process will accelerate. The usual subscription varies probably between about £30 and £50 a year.
I return to the main issue. Whatever the style of scheme and whichever of all these institutions introduces it, it is surely right that we should have not a situation in which lip-service is paid to the ideal of savings by successive Treasury spokesmen, but rather practical action to enable people to save for those purposes which they themselves deem to be desirable and right.
I should like to give the Committee some statistics. If the average industrial earnings at present are about £15 a week, the average wage earner in the course of his or her lifetime will earn a veritable fortune—between £30,000 and £40,000. How much of that do they have when they come to retire? Many of them have none at all. A recent Gallup poll showed that 33 per cent. of the population have no savings, while a recent survey, introduced by a committee of which my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) is the distinguished chairman, indicated that if contractual schemes for saving were available no less than two-thirds of the population would be only too ready to subscribe to them.
At the other end of the scale, we are only too conscious of the fact that the needs of about 2½million of our citizens were met in the year before last either wholly or in part through National Assistance. The object of the concessions which were given years back and of whose history we have heard something tonight was to encourage working people and middle-class people to stand on their own feet and not to rely on the State to provide for them. Of course it is right that the State should provide for those in desperate need, but it is surely the responsibility of the Committee, and perhaps of the Conservative Party in particular, to encourage people to be proud and independent and to make their own provision in life for their dependants and their families. It is for that reason that we feel so strongly on this subject.
It is my considered opinion, from some little practical experience of these matters, that the proposals which we are putting forward are entirely practicable. I hope that my right hon. and learned Friend the Chancellor of the Exchequer will consider the subject very carefully and do what he can to meet us. The volume of support which these proposals have obtained on this side

of the Committee will, I am sure, not have escaped his attention—nor their very favourable reception in the Press as a whole. May I take the point a little further and hope that we shall not have to wait until next year's Finance Bill—

Mr. John Rankin: Mr. John Rankin (Glasgow, Govan) rose—

Mr. du Cann: May I finish my sentence—before we see practical action taken in this matter, although it is clear that these matters require very careful consideration. I hope that we might see a little support for these ideas on Report.

10.0 p.m.

Mr. Rankin: Before the hon. Gentleman sits down, will he answer one question for me?

The Deputy-Chairman (Sir R. Grimston): Has the hon. Member for Taunton (Mr. du Cann) given way?

Mr. du Cann: I said, Sir Robert, that I would give way as soon as I had completed my sentence.

Mr. Rankin: The hon. Gentleman has detailed a number of methods of saving, and there is no disagreement about them. Would he add another method, that employed by the co-operative movement —that of saving as one spends?

Mr. du Cann: I made clear, I hope—if I did not, I apologise to the hon. Gentleman and the Committee—that in my opinion and in the opinion of many of us the vehicle which we are producing, which we believe to be sound, sensible and practical, as my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) said, would apply to the co-operative movement equally with many other financial institutions. Speaking for myself, I would certainly hope that the co-operative society would take full advantage of it.

Mr. A. E. Oram: I hope that Government spokesmen are being duly impressed this evening by the concerted efforts that are being made in all parts of the Committee on behalf of the small savers. Each of the main parties has its own new Clause on the Order Paper, and each makes its own proposal in its own way. It is interesting


to observe that as the years go by more and more hon. Members are taking an active interest in small savers and the way in which they are taxed.
The proposal with which I am concerned is that which would seek to remove the discrimination between co-operative society savings and small savings in the Post Office. The cooperative movement regards its facilities as comparable with those offered by the Post Office to small savers. The consumer member of a co-operative society has a pass book very similar to that of the Post Office saver, the facilities for making small deposits or easy withdrawals are comparble, and there are many co-operative shops and offices in which transactions can be conducted, which makes it a most convenient institution for small savings for the ordinary man and woman. We cannot see why this discrimination should have been brought about some years ago, and we cannot see why the Government have year after year resisted our proposal to give equality of treatment as between the two institutions.
The fact that we make this special plea on behalf of the co-operative movement does not mean that we do not welcome the increasing interest taken by other hon. Members in their own schemes. I should wish to know a little more about some of the new Clauses about which we have heard this evening before giving my conclusive support to them, but one can at least welcome the fact that more and more hon. Members are putting their names to proposals of this kind.
The hon. Member for Nottingham, South (Mr. W. Clark) used a phrase which we used to hear a good deal from Conservative lips—"a property-owning democracy". The word "democracy" brings to my mind a special feature of the co-operative society which does not seem to me to attach to the institutions on behalf of which other hon. Members have been speaking. It seems to me that the essential thing which counts in a democracy is the principle of "one man, one vote". In the other schemes which have been referred to it is not a question of "one man, one vote". It is a question of voting according to the size of the holding. That does not apply in a co-

operative society, in which we have the practice of true democracy. Therefore, in addition to the case which my hon. Friends and I have put forward that the co-operative movement offers savings facilities comparable to those of the Post Office, we claim that on social grounds also, the co-operative movement is deserving of proper treatment in these matters.
I hope that hon. Members opposite who show this keenness on behalf of the small saver and who, over the years, have spoken of a property-owning democracy will, therefore, support us tonight in the Lobby, as they have not done in previous years, and will vote for our new Clause on behalf of the cooperative movement.

Mr. Maurice Macmillan: I do not want to weary the Committee with repetitive argument, although it is remarkably difficult not to do so considering how frequently we have had to repeat our arguments without making much impression on the Treasury. I support especially the new Clause of my right hon. Friend the Member for Sutton Coldfield (Mr. G. Lloyd)—Relief on savings policies—because it has at least some hope of being considered as a fresh departure by the Treasury Bench.
While I have every sympathy with the speeches of the hon. Member for Dart-ford (Mr. Sydney Irving) and of other hon. Members opposite, there is a just complaint against their new Clause that apart from being slightly old-fashioned in its limitation—as if, to use the phrase of the hon. Member for Dart-ford, it is only the institution of co-operation which encouraged thrift among the working classes, a phrase which I should not hope to hear from these benches—as the hon. Member for Huddersfield, West (Mr. Wade) agreed, it is old-fashioned in that the people to whom the hon. Member referred, as the survey mentioned by my hon. Friend the Member for Taunton (Mr. du Cann) showed, engage in many more methods of saving than the Clause indicates.
The new Clause of the hon. Member for Dart-ford tends not to remove discrimination, but merely to extend it. I go with the hon. Member for Huddersfield, West in saying that what we want in dealing with the small saver is to apply terms of equality rather than


spreading the privilege of saving a little more widely. On the other hand, the great difficulty in attempting this proposal has always been that it is impracticable because administrative reasons make it difficult.
I have in the past put down similar Clauses to that now put down by the Liberal Party but with the relief limited to £15 and not to £25. Even the Wider Share Ownership Committee was con-vinced by the Treasury that our Amendment last year was impracticable. That is why the new Clause of my right hon. Friend the Member for Sutton Cold-field is even more worthy of attention.
I, too, hope that something will be done before the next Budget. Our proposal is new in that, being based upon an existing principle, it can surely be brought into effect either in this form or in such form as, with greater wisdom, the Treasury dictates. It could be brought in in its present form without extending any principle or involving administrative or policing difficulties for the Inland Revenue, other than those that that Department knows how to cope with. It would do only one thing, and that is remove the necessity of life cover for schemes of this sort to obtain tax privilege.
I know that the cost is unpredictable, but any examination of the likely outcome shows that it probably would not be very great, certainly in the first two years. If the cost to the Treasury of such a scheme rose, that would surely be an indication that its value was great and that it had been effective in bringing about new savings.
There is definite evidence that the absence of outlet of investment for what some people have called small investors, but which I prefer to call new investors of small savings, causes limitation and loss of savings. One of the reasons why there is so small a proportion of long-term savers in the country is the shortage of investment and difficulties of investing in the way in which they want to. The indications are that such a scheme would be useful, that it would be used and, in being so used, would not cost the Treasury an undue amount in concessions, certainly no more than existing tax schemes. Certainly there is no more danger of this scheme being abused than many of the others now in force.
It is not enough to try to achieve a greater measure of social justice and equality purely in terms of income. Our civilisation has reached a point where we must try to obtain a far greater degree of social equity and justice in terms of ownership—not only in ownership of durable consumer goods or a home to live in, but of the real and productive wealth of the country. That is why I hope that the Chancellor will do everything he can this evening, or later in this Bill, to meet us on this point.

Mr. Wade: Will the hon. Member answer one question? I am asking it only for clarification and for the information of the Committee. In answer to a question put to the hon. Member for Taughton (Mr. du Cann), I understood it to be said that the policies could be surrendered In the Clause there are these words:
(c) the policy provides that no sum shall become payable until not less than twelve years after the payment of the first premium. except by way of return of premiums and reasonable interest thereon in the event of the death of the individual before the policy matures;
(d) the policy includes provision securing that it shall not be capable in whole or in part of surrender, commutation or assignment by the individual;
I am rather puzzled by the statement that it may be surrendered.

Mr. G. Lloyd: This Clause has been drawn very strictly. Therefore, there is no provision for surrender except in the event of death. We wish this Clause to be moderate in the sense of being strict and following the full rigour of the attitude which one might expect from the Revenue, but in this particular instance I think we have gone too far. If my right hon. and learned Friend is able to adopt this proposal, I think he will find it will be necessary to have provision for surrender under a certain penalty to make sure that what we are giving is the twelve-year period and allowing for the possibility of ill-luck or circumstances making it impossible for a man to continue. The Clause would need amendment in that particular respect.

Mr. George Darling: I wish to assure the hon. Member for Halifax (Mr. Maurice Macmillan) that those of us who support


the Clause in the names of hon. Members of the Opposition are not asking for any special concessions or special privileges for co-operative societies. We put the Clause forward in this form because in the past there has been discrimination. I and I think my hon. Friends would agree that if we could get rid of discrimination altogether and treat all small savings in the same way for tax relief we would all be very happy.
I make only one observation. There is a great unity of feeling in the Committee that we should have encouragement from the Treasury in the form of tax reliefs and so on for all kinds of small savings. Apart from the technical discussions which must go on if the Government are to accept all the arguments now put forward, the Government have a moral duty at least to consider all these proposals and to do something on the lines advocated. That moral duty arises from the fact that this Government have been opening betting shops and bingo parlours. To redress the balance they have this moral duty to open savings shops in whatever form they may take to encourage small savings in every way.
10.15 p.m.
I add that, though it may be somewhat old-fashioned, if this country does not return to some of the old-fashioned ideas of thrift which our forefathers supported in the nineteenth century we shall never again get a healthy economy in this country. I am convinced that the views that are being expressed in the Committee this evening are absolutely essential to the well-being of the whole community, and that if the Government do not respond to the appeals being made to them tonight the country will be all the poorer for the neglect of their duty.

Mr. Edward Gardner: The principle which I believe hon. and right hon. Members on both sides of the Committee find so attractive is that small savers should be given the greatest possible encouragement by the Government. In doing this, I believe that the Government would be helping themselves in the most effective way to fight one of the great dangers to our economy, namely, inflation. Inflation is not

caused by having too much or earning too much money; inflation is caused by spending too much money. I remember a well-known economist once saying that the danger of wealth comes when people start thinking about spending it.

Mr. Ellis Smith: It all depends on who is spending it.

Mr. Gardner: It is for this reason that I give warm support to the proposal made by my right hon. Friend the Member for Sutton Cold-field (Mr. G. Lloyd) and urge the Government to take account of the advantages that would come from accepting this proposal, bearing in mind the discipline and the reinforcement of the intentions that would follow from introducing the contractual element in this proposal. I hope that my right hon. and learned Friend the Chancellor will see in this proposal a means of helping the small saver and at the same time providing an effective and safe barrier against inflation.

Mr. Rankin: I have listened to statements from the Government side of the Committee tonight which I welcome, and I want to say how much I regret that I did not hear similar statements last year, the year before and the year before that, when we were pressing from this side of the Committee the very things that are being pressed from the Government side tonight.
A year ago, at this very stage, I made a speech much longer than the one I intend to make tonight advocating—[Laughter.] Well, I do not want to be encouraged to depart from what I have just said. I urged the very things that have been urged from the Government side tonight. I am very sorry that I cannot quote all the hon. Members who have spoken so wisely, but I have listened to them saying things like this: "The small saver should be assisted" and "The Government have waited too long to help." I hope the Chancellor of the Exchequer is listening to those statements. He did not listen to some of the statements when they came from this side of the Committee last year or the year before, and I hope he will listen more closely to them tonight. I even heard one hon. Gentleman suggesting


that the P.A.Y.E. machinery should be used as a method of saving.
We on this side do not differ in any way from Tory Members in wanting to encourage saving. I see the Chancellor smiling. I thought that would draw a smile of encouragement from him. We want people to save. We have a method. It is not the machinery of P.A.Y.E. It is the co-operative method of saving. The hon. Member for Taunton (Mr. du Cann) mentioned his methods of saving, with which I do not disagree. He mentioned the unit trust and building societies. I have no quarrel with that, but I should have liked him to add the co-operative method of saving to his list, The hon. Member said that the employee earns an average of about f15 per week. The hon. Gentleman asked the employee to set aside in some form of investment a small part of his wage every week. That is a most desirable thing. That is the husband or the son. He is saving out of his wages.
I should like the hon. Gentleman and his colleagues to appreciate that there is another form of saving. When the husband goes home he gives his wages to his wife—all his wages, as good husbands always do, because she is the Chancellor of the Exchequer in the home. She has to run the home. She spends her husband's wages in the cooperative society, if she is a wise and foreseeing woman. A small portion of what she spends in the society is set aside as a saving. That accumulates. The hon. Gentleman is not going to discriminate between the saving that comes

out of the husband's wages and the saving that comes out of the housewife's or the mother's spending.
The Chancellor has been taxing that form of saving ever since he became Chancellor. I hope that hon. Members opposite, who will be supported by us if they come with us into the Division Lobby tonight in their attempt to encourage and spread saving from wages, will help us in our attempt to encourage saving from spending. It is not a new idea, but if it is to prosper, it must receive support from the Chancellor. He has refused it all along. Tonight he is faced with unanimity on both sides of the Committee in the desire to encourage saving. There is support for the idea from his own back benchers. There is support for a comparable idea, although differently born, from this side of the Committee.
The co-operative idea of saving was not born in the purple. It was born in a thatched cottage in Fenwick in Scotland. There must not be any class discrimination in our attitude to these forms of saving. Having secured the support of both sides of the Committee in regard to the need for saving and there being no disagreement as to the method of saving, we have only one individual to contend with, namely, the Chancellor. If both sides of the Committee will co-operate tonight and become good co-operators, we will force —no;we will not force, because I do not believe in force—we will induce the Chancellor in the long run to do the right thing.

Mr. Brooke: The Committee might think it appropriate—

Mr. Rankin: I thought that the Chancellor was going to reply.

Mr. Brooke: The hon. Member's shafts were wrongly aimed. The Committee may wish a Treasury Minister to express some views about the four proposals put before it. All of them have great interest, and the Committee is clearly at one in wishing to see the maximum incentive given to savings. The hon. Member for Glasgow, Govan (Mr. Rankin) said that there was unanimity in the Committee, but having listened to the debate throughout, I do not remember any Opposition Member speaking in favour of either of the Clauses supported by hon. Members on this side of the Committee. Neither do I remember Members of either of the other parties speaking in support of the new Clause to which the hon. Member for Huddersfield, West (Mr. Wade) referred.

Mr. Rankin: Mr. Rankin rose—

Lieut.-Colonel Sir Walter Bromley-Davenport: Sit down.

Mr. Rankin: On a point of order, For my guidance, Sir Robert, can you tell me who is Chairman of the Committee—the hunting colonel or yourself?

Mr. Brooke: With the greatest respect to the hon. Member for Dart-ford (Mr. Sydney Irving) and others who spoke in favour of tax relief for co-operative societies, I do not recollect any hon. Members behind me speaking specifically in favour of that. Although there is a common thread between all four proposals, it would not be right to say that any one commands the universal assent of the Committee. Yet it is of value that we are all agreed on the importance of increasing personal savings, and I think that my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) was right in saying that there is no ground of difference on that general theme, from a party point of view. Surely we would all wish to see voluntary rather than compulsory saving. The proper management of the economy demands a certain level of saving, and if it is not obtainable voluntarily it must be obtained by stern

Chancellors compulsorily, through higher taxation. I believe that the voluntary system is better, and I am sure that I carry the rest of the Committee with me when I say that. Given a buoyant society, such as we have generally enjoyed during the last eight or ten years, the means of saving exist. But something else is needed, which is even more important than tax incentives. I refer to confidence in the stability of the economy and in our policy to maintain the value of the currency. If we cannot convey that confidence to the people at large they may feel that their savings, which appear likely to achieve a reasonable return by way of interest, may nevertheless dwindle in value.
I did not quite follow my hon. Friend the Member for Halifax (Mr. Maurice Macmillan), who I know has given a great deal of thought to the subject, when he said that there was an absence of outlet for savings now. My hon. Friend the Member for Taunton (Mr. du Cann), who is also extremely interested in the subject, said that the Government were liable to pay lip-service to savings but not to do anything effective about it.
Whereas ten or twelve years ago the amount of net personal savings was comparatively small, in 1957 it had arisen to nearly £1,000 million, and last year—1961—it was over £2,000 million. That is not being done just by a small number of rich men; it means that the savings habit is spreading all the time through the country. There is no question that people are finding the means to save and the media to save.
The question before us is: to what extent should we use the tax system to further the savings movement? It has long been accepted that it is proper to give tax concessions on contributions to pensions and superannuation schemes. It has also long been the practice to give tax relief in respect of Income Tax—but not Surtax—on life assurance premiums.
10.30 p.m.
Since my right hon. Friend the Prime Minister was Chancellor of the Exchequer in 1956, there has been this exemption for the first £15 of interest in


the Post Office Savings Bank or ordinary department of a trustee savings bank. That equally ranks for Income Tax exemption, but not, of course, for Surtax.
It is right to put before the Committee the general background here. Hon. Members as well as Treasury Ministers have to face the fact that no fewer than three authoritative and independent external bodies in the last 50 years have reported against the use of the tax system to favour savings.
I am not saying that this is a decisive reason, but I am saying that all of us, in considering these matters, should recollect the background. The Royal Commission in 1920, the Royal Commission in 1955, and the Millard Tucker Committee, about the same time, all took the same view. I do not want to bore the Committee, but I think that it is right to quote from paragraph 63 of the Final Report of the Royal Commission on the Taxation of Profits and Income in 1955, which said:
It seems to us that in principle such a tax is more fairly distributed between A and B, having equal incomes and otherwise equal circumstances, if A and B pay the same amount of tax than if the tax on one of them is lower than the tax on the other because he has reserved part or a larger part of his income from immediate consumption. We think that any tax preference based on personal saving must be weighed against this general principle of equity.
I am not at all sure that the principle which the Royal Commission mentioned should be given absolute overriding authority, but it must be weighed in the balance against other considerations, as the Royal Commission said.
Part of this problem, and a part which particularly troubled the 1920 Royal Commission, is the great variety of schemes, all of them involving some loss of tax revenue, which can be urged if there is a desire to further personal savings through tax exemptions. This discussion in the Committee has underlined that. Three or four schemes entirely different from one another have been brought up and it may well be said that the Government have increased their own difficulties by establishing in 1956 tax exemption for the first £15 of savings bank interest. That concession, as Treasury Ministers recognised at the time that it would do, has accentuated

the demand for an extension of the principle to other schemes.
Another difficulty, which has hardly been mentioned in this debate, which we must all face—for there is no party issue here—with a number of the proposals canvassed here and elsewhere for tax incentives to further personal savings, is that, with many of these schemes one simply cannot be sure whether an increase in the holding of that particular savings medium has come out of income at all, that is to say whether it has been genuine saving. That is what we all want to encourage. We want people not to spend the whole of their income but to save some of it. It may be that the increase in the particular form of saving which may qualify for tax relief has not come out of income at all. It may have come through realising some other asset and may not be true saving. It will be common ground on both sides of the Committee that there is no case for tax relief when someone is simply switching his money from one form of investment to another, and—

Mr. Glenvil Hall: In order just to earn 2½per cent.?

Mr. Oram: And does the right hon. Gentleman realise that in the case of cooperative investment there is plenty of evidence that it is genuine new savings;that, indeed, 50 per cent. of it comes directly from dividends which people have decided to leave in their accounts rather than draw and spend?

Mr. Brooke: I was coming one by one to the cases included in the new Clauses, but it seemed right to preface my remarks on them by some general considerations that we have to take into account. If the hon. Member will look up my words in HANSARD, he will see that what I said was that this was liable to occur with a number of proposals for savings subject to tax relief.
If new Clause No. 11, which would extend the tax relief to co-operative and friendly societies, were accepted, it would cost the Chancellor about £2½million a year. That is not a great sum but, of course, it will immediately be asked: "Why stop there? Why should this tax relief be given to savings that


take the form of investment in co-operative or friendly societies? Why should it not be extended to building societies, Trustee savings banks? Why not to municipal banks and joint stock banks?" Then, of course, the cost becomes very different from £2½million.
The hon. Member for Huddersfield, West has a different suggestion. His new Clause is designed to give tax relief on the income derived from all company dividends to a total of £15 a year. That is a variant, but there, again, one can ask "Why should it be company dividends, and not certain other forms of investment income? "—

Mr. Wade: My new Clause was intended to cover any investment income. Whether my wording was adequate, I do not know, but my intention was that all investment income should be treated alike.

Mr. Brooke: I am obliged to the hon. Gentleman. I am afraid that I had not read that intention into his wording. If this were to extend to all investment income, I must advise the Committee that it would cost £40 million a year—a very much larger sum.
The specific exemption given to the first £15 of Post Office Savings Bank income is given, as I said, on the basis that two conditions must be satisfied: that the money invested earns only a low rate of interest—not more than 2½per cent.—and that the money invested must be lent directly to the Government. That has a bearing on the monetary policy of the Government, and is of direct assistance there. I think that the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) said that about 32 per cent. or 33½per cent. of the money invested in the co-operative societies was invested in gilt-edged, but that is only one-third of the amount which, if deposited with the Post Office Savings Bank, would be lent directly to the Government. The co-operatives, naturally and rightly, use their money for various purposes; part of it is used to finance their trading, and part is invested in gilt-edged. The Committee will agree that there is a sharp distinction between money so invested that the whole of it is lent directly to the Government and money which is invested in other most admirable bodies,

serving their own purposes but which do not exist to pass on to the Government what money is invested in them.
I was not sure as to how far the hon. Member for Dart-ford was pressing his point that co-operative societies were seriously suffering from this. I do not think that one can establish any strong case that the 1956 exemption for savings banks has materially harmed either the co-operative societies or any other bodies which seek to attract investments from the public.
My hon. Friend the Member for Nottingham, South (Mr. W. Clark) raised again a question which was debated last year, when my hon. Friend the Financial Secretary promised to examine it further. I am sorry to have to disappoint my hon. Friend, but I must tell him that further examination of his P.A.Y.E. proposal has only confirmed the view that it would be well-nigh impracticable. I do not say that it is inconceivable, but the more one examines it the more one sees the unattractive difficulties that would arise.
Apart from the practical difficulties, there is the question of the psychological effect, and I am bound to tell the Committee that the National Savings movement as a whole has up to now deprecated the idea of using it to support savings. I think there is a feeling that P.A.Y.E. itself is not a wholly popular operation. Also, most of us have feelings connected with post-war credits which do not make us very enthusiastic about the idea of semi-compulsory savings through the Income Tax system.
I grant that my hon. Friend's scheme would not be semi-compulsory but entirely voluntary, but it would be mixed up with the taxation system, as the post-war credits were.

Mr. W. Clark: I do not understand my right hon. Friend's point in connection with post-war credits. My Clause would give the right to the employee always to have control of his money. Consequently, my right hon. Friend's reference to post-war credits is not quite fair.

Mr. Brooke: I recognise that my hon. Friend's scheme would be entirely voluntary. On the other hand, I was seeking to represent the general view


which has been conveyed to Treasury Ministers by the National Savings movement that the whole history of post-war credits has cast a certain cloud over any plans that might link up voluntary savings with the taxation system.
I think that the main disadvantage of my hon. Friend's scheme is that it would involve an enormous expansion of staff. I am advised that, if the scheme proved to be popular, and was widely taken up, it would be necessary to add several thousand to the P.A.Y.E. staff of the Inland Revenue Department. As one who is seeking to keep down Government expenditure, that would not be a very attractive prospect to me.
It would not be a wholly satisfactory plan to would-be savers, because it is extraordinarily difficult, unless one is wonderfully well-informed about this, to know what amount of saving one would actually be providing for by asking for a certain change in one's code number. One cannot just read off, from alterations in the code number, the amount of further deductions from earnings that one is likely to have got by the end of the year as savings—in addition to one's tax liability.
There are one or two other minor points in my hon. Friend's new Clause as drafted which would increase the difficulties. For instance, he is seeking to provide that if money were deposited in the Post Office Savings Bank it would attract interest from the previous 6th April. But that would lead to a lot of Post Office deposits, followed by quick withdrawals. I am sorry to have to speak in this way about his scheme, because the general idea is one that, on various occasions, has attracted me to see if one could introduce some contractual scheme in connection with P.A.Y.E.
10.45 p.m.
But the numbers are frightening There are 22 million people under P.A.Y.E. That is why I say that if the scheme proved popular, it might involve several thousand additional staff. I doubt whether employers who, under this scheme, could not opt out, would welcome a plan of this kind which would add something to their work. When we are trying to get the P.A.Y.E. machine to work as quickly and as punctually as possible, there is no get-

ting away from the fact that this scheme would somewhat slow it up.
I come now to the very interesting new Clause of my right hon. Friend the Member for Sutton Cold-field (Mr. G. Lloyd), and I recognise and respect the purpose behind it. He is seeking, as he said, to provide an incentive to people who would like a bit of capital behind them. He is seeking to add another plan by which they could save not for their dependants in the case of death or for their own retirement, but for some specific purpose twelve or more years ahead. He pointed out, quite rightly, that if they were given some incentive to save so much a year for a period of twelve years or so, there would be a greater likelihood of their keeping it up.
There is virtue in this contractual principle if one can find a successful way of operating it. But I must say here and now that my right hon. and learned Friend the Chancellor of the Exchequer does not feel that this is a Clause which he could accept, for reasons which I will seek to explain in a moment. But he is interested in this whole project and prepared to follow up any scheme that might be devised and that seemed sounder than this.
I must equally say that we in the Treasury have been looking for solutions to these problems and we have not found them. We have been no more successful than my right hon. and hon. Friends. I should state what are the difficulties which a successful scheme of this kind ought to seek to overcome. One is the difficulty of switching, which I mentioned. If my right hon. Friend will consider what I am about to say as sympathetically as he considered the purpose which he intended to serve, he will appreciate that, if we were to incorporate his scheme as it stands into the tax law, it would lead to a very great deal of switching before it started to give any great value in the direction where he wishes to serve a good purpose.
As I read the scheme, although it is true that there is no Surtax relief, it would be available to anybody who had some capital and who could draw on that capital to put up to £150 a year into the scheme and claim tax relief, which I calculate at about £23 a year


for twelve years. That reduction of £23 a year in tax liability is not unattractive, and I cannot help thinking that large numbers of people quite other than the small savers who my right hon. Friend wishes to encourage would straight away go into this and claim their £23 a year with no loss to themselves and no advantage to the nation.
We must look at what has happened in the past. Reference was made to Mr. McKenna's "unfortunate" reversal of policy when he legislated in 1915 and 1916 to withdraw tax relief from schemes not unlike this. It is important to remember that Mr. McKenna withdrew tax relief from schemes which did not involve a life insurance element simply and solely because they were giving rise to avoidance. What was happening was that somebody entered into one of these contractual schemes for a period of years having made sure that there was a good surrender value if he gave up after a year or two. After a year or two he then gave up, taking the surrender value, and meanwhile he had also enjoyed his tax relief.
My right hon. Friend has very skilfully drawn his Clause so as to safeguard against that. He said he might have dawn it too strictly. There is no possibility of surrender. One cannot get the money back in less than twelve years except on death, unless one simply withdraws one's premiums; one gets no reward unless one leaves the money there for twelve years. That is certainly a very valuable safeguard. But I am bound to ask the Committee how attractive, subject to that condition, this proposed scheme would be to the small saver whom we want to help.
My right hon. Friend spoke of people who would like a bit of capital behind them. But the people who have not got much capital behind them and want a bit of capital behind them want that capital available for emergencies. They do not necessarily want it tied up for twelve years. I am not seeking to make the matter more difficult than it is, but this is a genuine difficulty. If one is to safeguard the scheme against the kind of avoidance use that was made of it before 1916, it is very hard not to render it unattractive to the people who really want money that may be available in case of emergency. I

fancy there would be strong pressure to release the 12-year tie on the money. I think that there would be certain other difficulties in the scheme which perhaps at this hour I need not pursue at length.
I think that the Committee would wish me to say something about the cost of the scheme. The present cost of the life assurance relief is £60 million a year—a substantial sum. Obviously, one cannot estimate with any certainty what the cost of my right hon. Friend's new Clause would be because nobody could say how much it would be taken up. It would be material, but I do not think one should judge it wholly on the ground of cost because that is so hard to estimate. What I am certainly prepared to say to my right hon. Friend is that the Chancellor is prepared to continue to search for schemes which would overcome the difficulties that I have mentioned but our best efforts in the Treasury have not yet succeeded in finding them. I have, as briefly as I have been able to do, indicated the dilemma which faces anybody who seeks to find a scheme that will serve the wholly desirable purpose that my right hon. Friend has in mind.
I hope that my right hon. Friend will feel that I have dealt with his new Clause not only adequately but sympathetically, because he is on to an important point. His is the most attractive in principle of the new Clauses that we have in front of us, but I am bound to say that, as drafted, it contains objections which up to the present we have found insuperable.

Mr. Mitchison: If I may be allowed three minutes—I will not take more—I am not going to say anything about the schemes that have been put forward with regard to P.A.Y.E. or the scheme that was put forward by the Liberal Party, except that it goes too far, quite obviously. I am not going to say anything either about the scheme which attracted the right hon. Gentleman the Chief Secretary but does not particularly attract me. Of course we want to encourage saving. The question is how far we are going to make exceptional allowances for it in the fiscal system. The insurance companies have done remarkably well out of the life assurance concession in the Income Tax Act.


They, much more than the small saver, I believe, would do remarkably well out of this scheme if it went through. I should prefer to see something a little more in the real interests of the small saver rather than in the real interests of insurance companies.
There are two things which can be done about saving schemes. First, where something is happening by way of saving, it should be encouraged to continue and grow. That applies exactly to what is happening in the cooperative movement. It does not apply to any of the schemes that has been put forward tonight. For that reason, I hope that the Committee will take a fresh and fair view of co-operative saving. There is no real distinction between saving in that form and saving in such a form that the result goes direct to the Government. There may be a difference from the Government's point of view for what I may call matters of high financial policy, but when it comes to encouraging saving help to the cooperative movement in this way is just as useful as help in the direction of the Post Office Savings Bank.
We have had a remarkable debate. No one has even mentioned National Savings. I have listened for the words to come out. That is one way in which a concession is made. The £15 tax-free interest on Post Office savings is another. Premium Bonds is yet another. All those things seem to me to make an even stronger case for giving a concession to the effective channel of working-class savings, if I may use those rather old-fashioned words, which the co-operative movement today represents. It was originally founded in the early years of the nineteenth century to protect the rather poor people from extortion, but it has come a long way from that. It now extends to the vast mass of our fellow citizens. It is in their interests that the Committee should support an Amendment to give the movement the modest fiscal encouragement for which we ask tonight.

Mr. Geoffrey Hirst: Mr. Geoffrey Hirst  (Shipley) rose—

Hon. Members: Divide.

Mr. Hirst: There is no question about it. I am going to have my say. I cannot let this go as it has been left by my right hon. Friend the Chief Secretary.

Whatever endearing qualities he may have, he is a professional stonewaller. Tonight we have had the biggest piece of stonewalling that I have ever listened to. It is as if the offices are changed but the Brooke goes on for ever.
Tonight hon. Members have made out a solid case. Every argument, relevant or irrelevant, which could possibly be deployed has been used tonight. Authoritative reports have been quoted in some instances but ignored in others. Does that impress anyone? It does not impress me. We have been told a good deal about the cost. The Government and the Chief Secretary realise only too well that the old-fashioned idea of the Budget being the be-all and end-all went out years ago. What counts today is the question of the resources and the capacity and production of the economy as a whole. My hon. Friend the Member for Halifax (Mr. Maurice Macmillan) made that aspect only too clear in an extremely good speech. It is the importance of saving to the economy as a whole. If we can influence people to save more and more, we can start to tax them less and less for the purposes we hear about so often.
Tonight my right hon. Friend lectured the Committee about what happened in 1916. The Government must wake up. [HON. MEMBERS: "Hear, hear."] They must. It is intolerable that we should sit here and listen to that sort of speech. I am not going to spare my right hon. Friend the slightest bit on this. It is the worst speech he has made, or that any other Minister has made, in my twelve years' experience here, and the attitude of the Committee has made it perfectly clear that that is the general opinion.
11.0 p.m.
It is vitally important that savings should be encouraged, and as people get increased incomes, and move into the taxable groups, they will become more and more interested in incentives to save, and they should be encouraged more and more to do so, as is suggested in the new Clause in the names of my right hon. and hon. Friends. They will not be able to do that if they are so heavily taxed as they are, but they could if they were encouraged as my right hon. and hon. Friends would encourage them, and if some of their incomes, within reasonable limits and with the hard and


fast rules as suggested in the new Clause, were relieved of tax.
To wipe all that away as though it were of no importance and to talk about cost is really not treating the Committee with the respect it deserves on this important subject. We have had an important debate, true; but what speech in reply? I am only too sorry that it is not possible, owing to the different natures of the new Clauses, for them to be combined and the Government shown, as they ought to be shown, and have one day got to be shown, that we

Division No. 208.]
AYES
[11.2 p.m.


Abse, Leo
Hart, Mrs. Judith
Probert, Arthur


Ainsley, William
Hayman, F. H.
Pursey, Cmdr. Harry


Albu, Austen
Henderson, Rt. Hn. Arthur (Rwly Regis)
Rankin, John


Allaun, Frank (Salford, E.)
Holman, Percy
Redhead, E. C.


Allen, Scholefield (Crewe)
Hooson, H. E.
Roberts, Albert (Normanton)


Awbery, Stan
Houghton, Douglas
Roberts, Goronwy (Caernarvon)


Blackburn, F.
Howell, Denis (Small Heath)
Rodgers, W. T. (Stockton)


Blyton, William
Hoy, James H.
Rogers, G. H. R. (Kensington, N.)


Boardman, H.
Hughes, Cledwyn (Anglesey)
Ross, William


Bowden, Rt. Hn. H.W.(Leics. S.W.)
Hunter, A. E.
Short, Edward


Broughton, Dr. A. D. D.
Irvine, A. J. (Edge Hill)
Silverman, Julius (Aston)


Brown, Rt. Hon. George (Belper)
Irving, Sydney (Dartford)
Slater, Mrs. Harriet (Stoke, N.)


Callaghan, James
Jay, Rt. Hon. Douglas
Snow, Julian


Castle, Mrs. Barbara
Jeger, George
Soskice Rt. Hon. Sir Frank


Cliffe, Michael
Jenkins, Roy (Stechford)
Spriggs, Leslie


Craddock, George (Bradford, S.)
Jones, Dan (Burnley)
Stewart, Michael (Fulham)


Cullen, Mrs. Alice
Jones, Jack (Rotherham)
Stonehouse, John


Davies, G. Elfed (Rhondda, E.)
Jones, J. Idwal (Wrexham)
Stross, Dr.Barnett (Stoke-on-Trent, C.)


Davies, Harold (Leek)
Jones, T. W. (Merioneth)
Swingler, Stephen


Davies, Ifor (Cower)
Kelley, Richard
Taverne, D.


Davies, S. O. (Merthyr)
Lawson, George
Taylor, Bernard (Mansfield)


Deer, George
Ledger, Ron
Thornton, Ernest


Delargy, Hugh
Lever, L. M. (Ardwick)
Timmons, John


Diamond, John
Lewis, Arthur (West Ham, N.)
Tomney, Frank


Dodds, Norman
Loughlin, Charles
Wade, Donald


Edwards, Rt. Hon. Ness (Caerphilly)
Mabon, Dr. J. Dickson
Wainwright, Edwin


Edwards, Robert (Bilston)
Mclnnes, James
Warbey, William


Evans, Albert
McKay, John (Wallsend)
Watkins, Tudor


Finch, Harold
MacMillan, Malcolm (Western Isles)
Weitzman, David


Fitch, Alan
MacPherson, Malcolm (Stirling)
Wells, William (Walsal, N.)


Fletcher, Eric
Manuel, Archie
Willey, Frederick


Forman, J. C.
Millan, Bruce
Williams, D. J. (Neath)


Fraser, Thomas (Hamilton)
Milne, Edward
Williams, LI. (Abertillery)


Galpern, Sir Myer
Mitchison, G. R.
Williams, W. T. (Warrington)


Ginsburg, David
Morris, John
Willis, E. C. (Edinburgh, E.)


Gordon Walker, Rt. Hon. P. C.
Oram, A. E.
Wilson, Rt. Hon. Harold (Huyton)


Gourlay, Harry
Owen, Will
Woof, Robert


Griffiths, W. (Exchange)
Pannell, Charles (Leeds, W.)
Wyatt, Woodrow


Grimond, Rt. Hon. J.
Pargiter, G. A.



Hale, Leslie (Oldham, W.)
Parkin, B. T.
TELLERS FOR THE AYES:


Hall, Rt. Hn. Glenvil (Colne Valley)
Pavitt, Laurence
Mr. Charles A. Howell and


Harper, Joseph
Pentland, Norman
Mr. Grey




NOES


Agnew, Sir Peter
Birch, Rt. Hon. Nigel
Chataway, Christopher


Aitken, W. T.
Bishop, F. P.
Chichester-Clark, R.


Allan, Robert (Paddington, S.)
Black, Sir Cyril
Clark, Henry (Antrim, N.)


Ashton, Sir Hubert
Box, Donald
Clark, William (Nottingham, S.)


Barber, Anthony
Boyd-Carpenter, Rt. Hon. John
Cooke, Robert


Barter, John
Boyle, Sir Edward
Cooper, A. E.


Batsford, Brian
Braine, Bernard
Cordeaux, Lt.-Col. J. K.


Bennett, F. M. (Torquay)
Bromley-Davenport, Lt.-Col. Sir Walter
Corfield, F. V.


Bennett, Dr. Reginald (Gos &amp; Fhm)
Brooke, Rt. Hon. Henry
Costain, A. P.


Berkeley, Humphry
Brown, Alan (Tottenham)
Coulson, Michael


Bidgood, John C.
Bullard, Denys
Craddock, Sir Beresford


Biffen, John
Campbell, Gordon (Moray &amp; Nairn)
Crosthwaite-Eyre, Col. Sir Oliver


Biggs-Davison, John
Carr, Compton (Barons Court)
Crowder, F. P.


Bingham, R. M.
Carr, Robert (Mitcham)
Curran, Charles

are growing up as a nation and beginning to realise, as it ought to be realised, the fact that it is not merely a question of cost to the Exchequer—that old-fashioned talk—but a question of how far this continual spending shall continue to undermine the economy. That is the idea behind my right hon. and hon. Friends' new Clause, and it deserves better of the Government than it has got.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 122, Noes 192.

Currie, G. B. H.
Leavey, J. A.
Renton, David


Dalkeith, Earl of
Legge-Bourke, Sir Harry
Ridley, Hon. Nicholas


d'Avigdor-Goldsmid, Sir Henry
Lewis, Kenneth (Rutland)
Roberts, Sir Peter (Heeley)


Deedes, W. F.
Litchfield, Capt. John
Robinson, Rt. Hn. Sir R. (B' pool, S.)


Donaldson, Cmdr. C. E. M.
Lloyd, Rt. Hn. Geoffrey(Sut'nC'dfield)
Rodgers, John (Sevenoaks)


Doughty, Charles
Lloyd, Rt. Hon. Selwyn (Wirral)
Roots, William


Drayson, G. B.
Longden, Gilbert
Scott-Hopkins, James


Elliot, Capt. Walter (Carshalton)
Loveys, Walter H.
Seymour, Leslie


Elliott, R. W. (Nwcastle-upon-Tyne, N.)
Lucas-Tooth, Sir Hugh
Shaw M


Emery, Peter
MacArthur, Ian
Shepherd William


Errington, Sir Eric
McLaren, Martin
Skeet T. H. H.


Farr, John
McLean, Neil (Inverness)
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Fisher, Nigel
Macleod, Rt. Hn. Iain (Enfield, W.)
Smithers, Peter


Fraser, Ian (Plymouth, Sutton)
Macpherson, Niall (Dumfries)
Smyth, Brig. Sir John (Norwood)


Freeth, Denzil
Markham, Major Sir Frank
Spearman Sir Alexander


Gammans, Lady
Marten, Neil
Stanley Hon. Richard


Gardner, Edward
Mathew, Robert (Honiton)
Steward, Harold (Stockport, S.)


Gibson-Watt, David
Matthews, Gordon (Meriden)
Stodart, J. A.


Gilmour, Sir John
Maxwell-Hyslop, R. J.
Stoddart-Scott Col Sir Malcolm


Goodhart, Philip
Maydon, Lt.-Cmdr. S. L. C.
Storey, Sir Samuel


Goodhew, Victor
Mills, Stratton
Studholme, Sir Henry


Gower, Raymond
Miscampbell, Norman
Tapsell, Peter


Grant, Kt. Hon. William
Montgomery, Fergus
Taylor, Frank (M'ch'st'r, Moss Side)


Green Alan
More, Jasper (Ludlow)
Teeling, Sir William


Hall, John (Wycombe)
Morgan, William
Temple, John M.


Hamilton, Michael (Wellingborough)
Nabarro Gerald
Thatcher, Mrs. Margaret


Harris Frederic (Croydon, N.W.)
Neave, Airey
Thomas, Leslie (Canterbury)


Harris, Reader (Heston)
Oakshott, Sir Hendrie
Thomas, Peter (Conway)


Harrison, Col. Sir Harwood (Eye)
Osborn, John (Hallam)
Thompson, Kenneth (Walton)


Harvie Anderson, Miss
Page, Graham (Crosby)
Tiley, Arthur (Bradford, W.)


Hastings, Stephen
Pannell, Norman (Kirkdale)
Touche, Rt. Hon. Sir Gordon


Hay John
Partridge, E.
Turner, Colin


Hiley, Joseph
Pearson, Frank (Clitheroe)
Turton, Rt. Hon. R. H.


Hill Mrs Eveline (Wythenshawe)
Peel, John
van Straubenzee, W. R.


Hinchingbrooke, Viscount
Percival, Ian
Vickers, Miss Joan


Hocking, Philip N.
Pickthorn, Sir Kenneth
Vosper, Rt. Hon. Dennis


Holland, Philip
Pike, Miss Mervyn
Wakefield, Sir Wavell


Hollingworth, John
Pilkington, Sir Richard
Walker, Peter


Hopkins, Alan
Pitman, Sir James
Ward, Dame Irene


Hornby, R. P.
Pitt, Miss Edith
Wells, John (Maidstone)


Hornsby-Smith, Rt. Hon. Dame P.
Pott, Percivall
Whitelaw, William


Hughes Hallett, Vice-Admiral John
Powell, Rt. Hon. J. Enoch
Williams, Dudley (Exeter)


Hughes-Young, Michael
Price, David (Eastleigh)
Wilson, Geoffrey (Truro)


Jenkins, Robert (Dulwich)
Prior, J. M. L.
Wise, A. R.


Johnson, Or. Donald (Carlisle)
Prior-Palmer, Brig. Sir Otho
Wolrige-Gordon, Patrick


Johnson, Eric (Blackley)
Proudfoot, Wilfred
Worsley, Marcus


Jones, Rt. Hn. Aubrey (Hall Green)
Pym, Francis
Yates, William (The Wrekin)


Kaberry, Sir Donald
Ouennell, Miss J. M.



Kerans, Cdr. J. S.
Rawlinson, Peter
TELLERS FOR THE NOES:


Kimball, Marcus
Redmayne, Rt. Hon. Martin
Mr. Finlay and Mr. J. E. B. Hill.


Lambton, Viscount
Rees, Hugh



Langford-Holt, Sir John

Mr. Selwyn Lloyd: I beg to move,
That the Chairman do report Progress and ask leave to sit again.
I cannot pretend to be exhilarated by the progress which we have made so far. I think that we have made a certain amount of progress, and I hope that we shall make rather faster progress tomorrow. In all the circumstances, I think that it would be appropriate, and not very unpopular, if I moved to report Progress now.

Mr. James Callaghan: I am not surprised to hear that Motion moved at this stage in the proceedings, when we have just heard the worst speech in the twelve years in which the hon. Member for Shipley (Mr. Hirst) has sat in the House. It does not surprise me that the Government have decided to throw in the towel. This is very welcome to us; we hoped that the

Chancellor would move the Motion at this point. But I do not know whether my persuasions were more important or whether it was the stabs in the back which he received from some of his supporters. If the Government could have seen the faces of their supporters while the last series of new Clauses were being discussed, they would feel very worried about Middlesbrough, West and Derbyshire, West.

Mr. Selwyn Lloyd: The hon. Member is trying.

Mr. Callaghan: The complaint of some of the Government supporters is that the Government are not even trying.
We are glad that the Chancellor has moved the Motion. We are delighted to finish on this happy note of the speech by the hon. Member for Shipley, and we shall renew the combat tomorrow with


the aid, at least vocally, of the hon. Member. Some day we may even attract his vote.

Mr. Hirst: The hon. Member has had it before now.

Question put and agreed to.

Committee report Progress: to sit again tomorrow.

SUB-POST OFFICE WARRINGTON

11.13 p.m.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. J. E. B. Hill.]

Mr. W. T. Williams: The case to which I should like to draw attention tonight is a rather unhappy case, of which the Minister already knows a great deal. It is one, as he knows, which has given me great concern and anxiety and which has given rise to a good deal of concern in my constituency.
The facts of the case, quite briefly, are that in August, 1961, the sub-postmistress of Folly Lane sub-post office in Warrington discussed with the head postmaster there the possibility of resigning her position. The sub-postmistress, Mrs. Tabern, at that time had no fewer than thirty years' service with the Post Office, twenty years of that as sub-postmistress of the Folly Lane sub-post office. Her reasons for resigning were such as I think would commend themselves to the sympathy of the House. She has a sick daughter who has been receiving treatment at a London hospital. After being an in-patient in the hospital, the daughter now has to visit a specialist continually in London. The second daughter was hoping to have begun college training in London in the autumn.
Mrs. Tabern has told me she explained to the head postmaster her anxiety to remove to London for these reasons, of her need to sell her own premises if she was to buy other premises in London, and of her fear, if the negotiations broke down in respect of her new premises, of losing her livelihood unless some arrangement could be reached by which it would be possible for her, if the negotiations broke down, to withdraw her resignation. At that time the head

postmaster told her that he understood the position and assured her that in the circumstances she would be able to withdraw her resignation "until the very last date."
It is clear that there is some ambiguity about those last words and apparently they have been differently understood by Mrs. Tabern and by the head postmaster. Mrs. Tabern thought them to mean until the last effective day of her resignation. The head postmaster took them to mean until the last day on which new applications would be received. Perhaps even that would not have mattered but, as things turned out, this lady feels she has now a number of grounds of grievance about which not only she but nobody can be very happy.
In the event, a number of applications were received and a young lady was appointed who had been employed as a clerk at head office and who bought premises about 150 yards away from those occupied by Mrs. Tabern, premises which Mrs. Tabern needed to sell if she was to proceed with her own purchase of London premises. The House may feel that perhaps it was unfortunate that the head postmaster, knowing her position, as the situation developed, did not warn Mrs. Tabern of the way things were going. He had to give consent for the removal of the premises from Mrs. Tabern. He must have known that the consequences to Mrs. Tabern of being unable to sell her premises would be disastrous to what were, after all, her proper plans.
Mrs. Tabern says that the first intimation she had was on 15th December, 1961, that is about three weeks after the closing date for the receipt of new applications. She was then told by the head postmaster that a new appointment had already been made and that the new post office was to be further down the lane, about 150 yards away from hers. According to her understanding of the agreement, she then attempted to withdraw her resignation but she was told that that was impossible as the new appointment had been made and new premises negotiated. The effective result of this procedure has been that Mrs. Tabern has lost her source of livelihood and has been unable to obtain the alternative office which was so important to her and to her family.
I have spoken of the unfortunate fact that the head postmaster did not advise Mrs. Tabern of the way things were going as he might well have done. There are, however, other rather more unhappy features of the case on which I have already spoken to the Minister. In the first place, it is required that copies of vacancies are sent to the vacant office, the nearest other office, the head office counter, the Ministry of Labour, and the local secretary of the Federation of Sub-Postmasters.
In this case, Mrs. Tabern has insisted throughout that she never received any notice, and that she was never told of the closing date for vacancies. The Minister has said that, in fact, it is unlikely that the head office could have made a mistake about this, but I have in my hand the notice to the secretary of the Federation of Sub-Postmasters. The Minister may care to look at it, and see that there has been a mistake, because there is no reference in this notice to any closing date.
Further, Mrs. Tabern has since assured me that a member of the head office staff will confirm that Mrs. Tabern had rung up to complain that no notice had been sent to them while the intermediate days were running. It is not my object to make public scandal, but I can let the Minister have the name of that official if she wants it.
On the question of allocating premises other than those already in use, I have already spoken to the Minister of the failure of those personally concerned—for, after all, this lady had served the General Post Office for thirty years without blemish and without complaint. But the situation that has arisen has given rise to wider concern merely than that. On 13th March of this year, after I had discussed the case somewhat unprofitably with the Minister, I asked the Postmaster-General:
…(1) what are normally the minimum distances in urban areas between sub-post offices;
(2) in what circumstances, and for what reasons, permission is given for post offices in urban areas to be situated within less than the normal distance between sub-post offices.
The Assistant Postmaster-General replied:
The normal minimum distance between sub-post offices in urban areas is a mile, but we do not apply this standard rigidly. We also take into account the number and position

of the houses in each area, the nature of the local shopping facilities, whether the journey to the nearest post office is particularly difficult, and the possible need to make special provision for old age pensioners."—[OFFICIAL REPORT, 13th March, 1962;Vol. 655, c. 137.]
In view of the discussions that have taken place between the Minister and myself about Folly Lane, and since the Assistant Postmaster-General knew at the time of the background of those Questions, I hope that I shall not be thought discourteous if I say that I thought those Answers a little disingenuous. I therefore asked the Postmaster-General, on 27th March, 1962:
…(1) for what reasons he authorised the establishment of a sub-post office in Folly Lane, Warrington, which was situate further from the Dallam Estate than the sub-post office which it replaced, and is within a distance of 700 yards from its neighbouring sub-office? 
The hon. Lady replied:
As I told the hon. Member in reply to his Questions on 13th March, we do not apply our standards rigidly where special circumstances obtain;and, as regards Folly Lane, our decision meant that local residents were not deprived of facilities they had had for many years."—[OFFICIAL REPORT, 27th March, 1962;Vol. 656, c. 97.]
In the circumstances of this case, it would seem that those last replies were perhaps a little more than disingenuous. In the first place, some six years ago, as the Minister knows, Mrs. Tabern herself asked leave to remove her sub-post office from her then premises to the address for which permission has been given to her successor. She was refused permission to transfer, on the grounds that it was too near the sub-post office in Bewsey Road, which was the neighbouring post office less than 700 yards away.
That, I am told, can be confirmed, if the Minister chooses, by contacting the sub-postmaster in Bewsey Road. It is a little difficult to see in what respect the situation has changed so that what was then regarded as fatal to a transfer is now regarded as being all right. In fact, the change in poliicy has caused some anxiety, not only to Mrs. Tabern and her friends, and to others in the constituency, but also to the Federation of Sub-Postmasters. The general secretary of the Federation wrote to his local branch in Warrington to suggest that it might be better to make a protest to the head postmaster about the re-siting of this


office. I read from his letter the relevant paragraphs:
There is provision in the Rules for the Staff Side to be consulted when a Head Postmaster is considering the repositioning of a Sub-Office.
While we must recognise that the Rule is mainly concerned with forward planning to meet developing areas, its existence at least gives you some ground for protest in the present circumstances. I understand from Mrs. Tabern that some years ago they wanted to move to get better premises, and the Head Postmaster at that time would not agree to the move suggested because of the effect on the Bewsey Road, which will be within half-a-mile of the new location.
…the Federation had an agreement with the Post Office to ensure that when it was intended to re-position an office there would be prior staff consultation and that this is provided for in Head Postmasters' Manual C I 6.
That does not appear to have been done in this case. The letter makes the further comment that this gave rise to in turn to some concern, and continues:
Although it does not affect any action you can take, I understand that a serving Sub-Postmaster from Nyewood, Rogate, Petersfield, applied for this appointment but that the Head Postmaster said he could not be appointed as he was unable to attend for interview until after Christmas.
Mrs. Tabern's resignation did not take effect until after Christmas. In these circumstances, I feel that it is perhaps unfortunate that until these matters were brought to the attention of the Postmaster-General as early as 22nd December, and before the new appointment had taken effect, the only response from the hon. Lady to the appeals that came not only from me but also from others in Warrington who are greatly disturbed was that it was impossible to do anything about it and to express her regret that there was nothing she could do to help Mrs. Tabern.
It is difficult to see now what can be done, but it is certainly not right that the sense of grievance of a servant of the General Post Office for thirty years at such treatment should go unrecorded.
My last appeal to the hon. Lady is this: will she not even now do what lies in her power to mitigate the misfortune that this lady has incurred? Will she not see to it that everyhing that can be done will be done to ensure that any chance Mrs. Tabern may have to find another place to serve will not be denied

to her? If, as the hon. Lady told me, she feels that to undo this act would be unfair to other people involved, will she not consider that as the letter of the law has been strictly and perhaps unfairly invoked against Mrs. Tabern, she also has some claim upon the concern of the Postmaster-General?

11.28 p.m.

The Assistant Postmaster-General (Miss Mervyn Pike): The facts as put forward by the hon. Gentleman are, of course, substantially as we discussed them in March and even in January this year. I do not think I need weary the House by going over these facts again. It is true that Mrs. Tabern did discuss with the head postmaster of Warrington in August last the reasons for her resignation, and they are reasons which command the sympathy of all of us. Indeed, they commanded the sympathy of the head postmaster and led him to assure her that he would help her as much as he could in her move at that time.
I believe I am right in saying that he assured her that every assistance would be given to her in her search for a sub-post office near London so that she could see her daughter. On 30th October, she sent in her resignation, which was acknowledged by him on 31st October. As the hon. Gentleman has said, notices of vacancy went out on 6th November, which stated that the last day for applications was 24th November.
I agree with the hon. Gentleman that Mrs. Tabern now says that she did not receive that notice of vacancy. Tonight he has told me that he has knowledge of the fact that she did telephone the head post office. I can only regret that he did not tell me of that fact before, because this is the first time I have heard it, and at this point I am not in a position either to accept or deny that statement. The hon. Member and I have discussed the matter fully, once personally and also by letter, and I am sorry that this is the first time that he has acquainted me with the fact that there was a mistake in the notice to the secretary of the National Federation of Sub-Postmasters. Even so, these factors do not alter the case upon which I based my judgment in January this year—I think that the hon. Member said that 22nd December was the first time that I heard of it.
Six applicants applied for the post of sub-postmaster as a result of the vacancy notice which was posted up, and three of those were chosen for the short list. All three were people well qualified to run a sub-post office and at that point what the head postmaster had to decide was which person could offer in the first place the best qualifications, allied, of course, to suitable premises for the discharge of the duty of sub-postmaster.
I stress that we have to have careful regard to the qualifications of the person concerned and along with this we have to take into consideration the new premises which he might offer and consider whether those premises are equally suitable premises for the general public and the efficient running of a post office.
On this occasion, only one person in the end proved suitable, having qualifications and premises. The hon. Member mentioned a Mr. Morgan who was a sub-postmaster down in Hampshire and who could not come for an interview until January. But the facts about Mr. Morgan's application were not only that he could not come for an interview until January, but that he had stated to the head postmaster that he would be unable to take up his duties in February, which was the operative date when it was necessary for the sub-postmaster to take up his duties.
In the event, Mrs. Pressage, one of the applicants, came forward without premises and was therefore ineligible for the post and, as I have already stated, another candidate, Mr. Morgan, stated not only that he could not come for an interview until January, but that he could not take up his duties in February, when it was necessary for the sub-post office to be taken over by the new applicant. The only applicant with the qualifications was Mrs. Lycett who was a counter clerk, as the hon. Member said, at the Warrington Head Post Office, well qualified for the job of sub-postmistress, having the premises at 26, Folly Lane, which are, as the hon. Member said, 150 yards on the other side of the road from the present premises.
The hon. Member mentioned the fact that six years ago the head postmaster then said that these premises were not suitable for the repositioning of the post

office, which was then being run by Mrs. Tabern. He has made some play of the obligation, which we try to fulfil wherever possible, of consulting all the interested parties when we are repositioning a post office. But on this occasion we were not concerned with the repositioning of the post office but with the appointment of a sub-postmaster, or sub-postmistress, to take over the premises on the relinquishing of the office by Mrs. Tabern on 31st January.
The hon. Gentleman mentioned also that the head postmaster when discussing this problem with Mrs. Tabern had said that he would allow her to withdraw her resignation right up to the last day. Naturally, I do not deny that Mrs. Tabern may in all honesty have thought that he meant that she could withdraw her resignation right up to 31st January, but it is unrealistic to consider for a moment that he was in fact giving her that impression. His responsibility is to ensure that there is a sub-post office in operation from the moment of the relinquishment of the previous office so that there is complete continuity of the office for the purposes of the general public.
So in this case his responsibility was to ensure that there was a new sub-post office in being with a new sub-postmaster on 1st February, 1962. It is quite un realistic to suppose that he really gave the impression to Mrs. Tabern that she was able to withdraw her resignation right up to 31st January. What the head postmaster, in his honest attempt to help Mrs. Tabern as much as possible, wished to convey to her was that, in fairness to the other applicants who possibly had entered into negotiations for new premises, he would be bound to consider the applications which had come in but if she had second thoughts before the last day when applications closed he would consider her plea to withdraw her resignation.
It is an unfortunate factor in this case that out of the five notices that went out, Mrs. Tabern's, according to her, was not received by her. We cannot explain why that notice was not received by her. We know that—this is my knowledge of the case—the notice was sent out to her.
The position I found myself in at the end of December when the case was brought to my notice was that on 14th December the head postmaster had confirmed the appointment of a new sub-postmistress. He had confirmed the appointment of Mrs. Lycett, who at that point had bought new premises and had entered into a contract to adapt the new premises to the requirements of the General Post Office so that she might carry on the sub-post office there. At that point he had notified her that she had been successful and that she was due to start her office as sub-postmaster on 1st February.
Mrs. Lycett immediately started the adaptation of her premises. There was very little time. It was just before Christmas, with all the delays that occur over the Christmas period in trying to do structural alterations to premises. She had to get on straight away with the adaptation of the premises at 26, Folly Lane in order to reach the point on 1st February which she did.
The head postmaster himself went to tell Mrs. Tabern of the new appointment on 15th December. There was, of course, no need for him to go himself to tell her of this, but he thought that in the circumstances he should go and tell her of the new appointment. It was at that point that she asked for her resignation to be withdrawn. It was at that point that he explained to her that it was too late. As I say, it was not until 22nd December, when the new sub-postmistress had already been confirmed in her appointment, that the appeal was made to me that the whole matter should be put back into the melting pot. We all have the greatest sympathy with Mrs. Tabern. I have assured the hon. Member that we shall do everything we possibly can to help her to obtain the position of sub-postmistress either in her own district where she is now or in the London district to which she wishes to move.
The hon. Gentleman went on to say some things about the way in which we position our post offices and about the yardsticks which we use. I should like to take this opportunity of stressing that, although we have obviously to lay down fairly rigid yardsticks for the use of head postmasters when they are

deciding upon the positioning of post offices and the granting of new sub-post offices to districts, at the same time we try to be very flexible in our interpretation of those rules. So the position is that when the head postmaster has looked at the circumstances of the case and has probably decided that within the strict interpretation of the rules there is no case for a new sub-post office, it is at that point that the regional headquarters reviews the case. These matters are constantly being reviewed, as I am always telling the House. We are constantly looking at the positioning of our sub-post offices. It is at that point that the regional headquarters looks at the case to see whether there are any exceptional features and ways in which we can discharge our responsibilities to the public without being too rigid in keeping to the letter of our own rules. It is at that point that we try to be as flexible as possible.
Even after this review has been entered into, these cases come up to headquarters, where it is my responsibility to look at them and find if there are any exceptional cases. As the hon. Gentleman knows from Dallam Estate in his constituency, having looked at the case myself and seen all the features of the case, I decided that exceptionally a sub-office could be granted. That is the way these rules are worked. There is nothing disingenuous about our replies, nor is there anything insincere about my repeated assurances to hon. Members that we do look at these matters very sympathetically.
There is nothing much that I can add tonight to the facts which have been outlined by the hop. Gentleman and the facts as I have tried to portray them to the House. I should like to stress that in this case the head postmaster acted perfectly correctly. It may well be that the hon. Gentleman thinks that he should have bent the regulations here and should have helped there. His responsibility was to make absolutely certain that, when the resignation of Mrs. Tabern became affective on 31st January, he had a fit and proper person with fit and proper premises to continue the sub-office in that district on 1st February. All his efforts were bent to that end and he chose a first-class person to run the post office. The post


office is well positioned to serve the needs of the district and we believe that the new postmistress is doing an excellent job.
We are all sorry for the circumstances in which Mrs. Tabern finds herself at this time. I can only repeat my assur-

ance that anything we can do to see that she gets suitable premises near London will certainly be done by my Department.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Twelve o'clock.